Wholesale core inflation in the United States fell unexpectedly in July, matching the largest drop since early 2003, as prices for light trucks and cars fell.

Meanwhile, wholesale prices including food and energy came in below expectations, suggesting that inflation pressures may be easing.

The producer price index for finished goods rose by 0.1% on a seasonally adjusted basis last month, after increasing 0.5% in June, the U.S. Labor Department said today.

The producer price index for goods excluding food and energy costs fell 0.3% in July, matching the largest drop since April 2003. Core producer prices also fell 0.3% in October of last year. The core rate climbed 0.2% in June.

In the 12 months ending in July, overall wholesale prices climbed 4.2% on an unadjusted basis. The core rate was up 1.3%. Wall Street economists had expected the overall PPI to rise 0.4% in July and that the core PPI would go up 0.2%.

Today’s report showed producer prices for finished goods in the energy sector increased 1.3% last month, after rising 0.7% in June. Gasoline was up 0.7% after rising 6.3% in June and 2.2% in May. Natural gas rose 0.9% and electricity increased by 1.8%. Food prices fell 0.3% in July, as prices for finfish, shellfish and eggs all fell significantly.

Wholesale prices of passenger cars fell by 0.8% in July. Prices of light trucks dropped 3.1%, the largest decline since April 2003. Civilian aircraft fell 0.1%. Pharmaceutical preparations dropped 0.2%.

Deeper in the production pipeline, prices increased. Prices of raw materials, also known as crude goods, rose by 3.1% in July after declining 1.7% in June. Intermediate goods prices increased 0.5% after climbing 0.7% in June.

Today’s inflation data could bolster the Federal Reserve’s argument that slowing economic growth will ease inflation pressures.

Wednesday’s release of the U.S. consumer price index data is also likely to be closely watched by the central bank. Economists expect the CPI to grow 0.4% in July, while the core rate is projected to be up 0.3%.