NEW YORK (CNN/Money) - U.S. wholesale prices fell in June, the government said Thursday, countering Wall Street's forecasts for a slight increase and soothing concerns that inflation may be on the rise.

The Labor Department said its producer price index (PPI), a measure of wholesale prices, fell 0.3 percent after rising 0.8 percent in May. The so-called core PPI, which excludes often volatile food and energy prices, rose 0.2 percent after rising 0.3 percent in May.

However, in the Core PPI, there was upward pressure from car prices, which went up for the second straight month, due to reduced incentives from automakers.

Economists, on average, expected PPI to rise 0.2 percent and core PPI to rise 0.2 percent, according to Briefing.com

U.S. stock futures Thursday morning rose moderately following the report.

Over the last 12 months, overall producer prices have risen 4.0 percent. The Federal Reserve, which recently raised U.S. interest rates a quarter point to 1.25 percent to keep inflation at bay, is scrutinizing all fresh price information as it assesses the pace of monetary tightening needed as the economy powers ahead

The drop in producer prices was driven mainly by a sharp decline in energy prices. Energy prices fell 1.6 percent in June with gasoline down 5.2 percent, the largest drop for both measures since May 2003. The reversal countered May's data when energy prices had risen 1.6 percent and gasoline advanced 5.7 percent.

Finished food prices, another important component in the series, fell by 0.6 percent, after rising 1.5 percent in May.

Further back in the production pipeline, cost pressures also appeared to be abating with intermediate goods up 0.5 percent after climbing by 1.1 percent in May.  

-- Reuters contributed to this report