U.S. wholesale prices fell significantly to 2.7% last month, a sign that inflationary pressures in the economy are easing more than a year after the Federal Reserve began aggressively raising interest rates.

From February to March, the government’s producer price index dropped 0.5% as energy prices plunged after having been unchanged from January to February. Compared with a year ago, wholesale prices were up 2.7% in March, down significantly from a 4.7% year-over-increase increase in February.

The Labor Department's producer price index (PPI) reflects prices charged by manufacturers, farmers and wholesalers. It can provide an early sign of how fast consumer inflation will rise.

Wholesale inflation has come down steadily — from a record 11.7% year-over-year increase in the PPI in March 2022 — since the Fed began raising its benchmark interest rate to fight the worst inflation bout in four decades. Beginning in March of last year, the Fed has raised its key short-term rate nine times and is expected to do so again at its next meeting, May 2-3.

Thursday's PPI figures follow a report Wednesday that showed that U.S. consumer inflation eased in March, with less expensive gas and food providing some relief to Americans. Still, consumer prices continue to rise fast enough to keep the Fed on track to further raise rates.

Core consumer inflation, in particular, remains stubbornly high. Measured year over year, core prices are up 5.6%, far above the Fed's 2% inflation target. The year-over-year core consumer inflation figure rose in March for the first time in six months.