NEW YORK (CNN/Money) - Falling energy prices led overall wholesale prices down in December, the first broad decline posted in six months, according to a government report released Friday that put this inflation measure significantly lower than Wall Street's expectations.

The producer price index (PPI), which measures the price of finished goods sold to businesses, posted a 0.7 percent decrease in December, according to the Labor Department, compared to a 0.5 percent rise in November. Economists surveyed by Briefing.com had forecast a drop of 0.2 percent.

Energy prices were down 4 percent as wholesale gasoline fell 14.4 percent and home heating oil prices fell 10 percent on that basis.

It was the sharpest fall in overall wholesale energy prices since April 2003, the month after U.S. forces first entered Iraq. But overall, finished energy prices are still up 13.4 percent from a year earlier.

The so-called "core-PPI," which excludes often volatile food and energy prices, posted a 0.1 percent increase, compared with the 0.2 rise in November. Economists' forecasts had been for the core-PPI to grow 0.2 percent.

The minutes of the December Federal Open Market Committee show that Fed policy makers are more concerned than previously believed about the risk of inflation, which has raised expectations of future interest rate hikes. But the December report suggests that inflationary pressures so far remain in check.

The index shows a 2.2 percent rise in the core-PPI during the last 12 months. While that's up from the 1 percent rise in the core-PPI in 2003 and a 0.5 percent decline in 2002, it's still generally considered a sign of only modest inflationary pressures.

Wachovia Securities Chief Economist John Silvia said the report shouldn't give too much comfort to the markets because energy prices have already started to rise again since the readings were collected.

"This series is quite volatile on a month-to-month basis," he said. "The PPI is down big, but energy prices are already up. Next month you'll probably see PPI up, maybe sharply, again."

Silvia said the more modest core-PPI change suggests that the Fed is right to be keeping a close eye on inflation, but not enough to get the Fed to raise rates by more than a quarter percentage point, or to pause on its path of measured interest rate hikes, in any of its next few meetings.

"What you're seeing is that inflation is rising," Silvia said. "It's still at a low level, but you know what the trend is. The question to ask is, How much is too much? At what point does the Fed say it's risen enough that we don't want it to go any higher? That's the difficult question to answer."