Higher energy prices were to blame; without food and energy, wholesale inflation rose just three-tenths of 1 percent.

He said the Federal Reserve Board has achieved its goal of lowering wholesale inflation and might ease credit during the second quarter.

But the gains in wholesale inflation were not as great as the numbers might suggest, economists said.

Still, even if the decline in vehicle prices had not been so steep, wholesale inflation in October would have been low.

But the May report held out some hope for moderation in wholesale inflation in coming months.

The US Government reports that wholesale inflation in 2005 increased by highest amount since 1990.

The yield on the 30-year bond dropped to a 25-year low of 5.85 percent on reports of low wholesale inflation.

Alcohol-Fed Inflation Economists have found another fuel to blame for increasing wholesale inflation.

A sharp rise in a commodity price index and last week's report of increasing wholesale inflation have recently hammered the bond market.

The Labor Department reported encouraging results for the Producer Price Index, a barometer of wholesale inflation.