WASHINGTON (AP) — U.S. wholesale prices rose 0.3% in August, just half the July gain, as food and energy prices decline.

The Labor Department said Thursday that the August advance in the producer price index — which measures inflation before it reaches consumers — followed a 0.6% surge in July which was the biggest monthly gain since October 2018.

Helping to moderate wholesale prices in August was a 0.4% drop in food costs, the third straight decline after a big jump in May caused by supply bottlenecks related to coronavirus cases at meat packing plants. Energy costs edged down 0.1% in August after sizable gains in the previous three months.

The moderation in wholesale prices in August was an indication that inflation is remaining at low levels which will allow the Federal Reserve to keep its benchmark policy rate low for the foreseeable future in an effort to give a boost to an economy hit hard by the coronavirus pandemic.

Over the past 12 months, wholesale prices are down 0.2% while core prices, which exclude volatile food and energy costs, are up a modest 0.6%.

"While some see high inflation luring around the corner, we believe there is little scope for prices to heat up meaningfully as the economy continues to only slowly recover from the Covid-19 crisis," said Lydia Boussour, senior U.S. economist at Oxford Economics. "Inflation is likely to remain below 2% well past 2022, reinforcing the Fed's strong easing bias."