WASHINGTON (Reuters) -U.S. producer prices unexpectedly fell in April as the cost of services declined by the most since 2009, pulled down by ebbing demand for air travel and hotel accommodation.

The producer price index for final demand dropped 0.5% last month after an upwardly revised unchanged reading in March, the Labor Department's Bureau of Labor Statistics said on Thursday.

Economists polled by Reuters had forecast the PPI rising 0.2% after a previously reported 0.4% drop in March. In the 12 months through April, the PPI increased 2.4% after climbing 3.4% in March.

President Donald Trump's protectionist trade policy, immigration crackdown as well as references to Canada as the 51th state and a desire to acquire Greenland have contributed to a sharp drop in tourist travel, hurting airline ticket sales, hotel and motel bookings.

Wholesale services prices dropped 0.7%, the largest

decline since the government started tracking the series in December 2009, after rising 0.4% in March.

A 1.6% decrease in trade services, which measure changes in margins received by wholesalers and retailers, accounted for more than two-thirds of drop in services. Prices for hotel and motel rooms dropped 3.1% after easing 0.5% in March. Portfolio management fees plunged 6.9%, while airline fares fell 1.5%.

Portfolio management fees, hotel and motel accommodation and airline fares are among the components that go into the calculation of the core Personal Consumption Expenditures price index, one of the inflation measures tracked by the Federal Reserve for its 2% target.

Last month's tame reading could see economists downgrade their core PCE inflation estimates for April, which are currently around a 0.2% increase. The core PCE price index was unchanged in March and rose 2.6% year-on-year.

Financial markets expect the U.S. central bank to resume cutting interest rates in September, though some economists believe policymakers could wait until December.

While the United States and China moved to de-escalate their trade war over the weekend, tariffs remain higher than before President Donald Trump returned to the White House in January.

Washington agreed to slash duties on Chinese goods to 30% for the next 90 days while Beijing will reduce tariffs on U.S. goods imported into China to 10% from 125%.

A 10% blanket duty on almost all goods imported into the U.S. remained in place as did sectoral tariffs.

Economists expect inflation will still rise this year, though not as sharply as they had estimated before the 90-day truce. They expected the Personal Consumption Expenditures (PCE) Price Index, excluding the volatile food and energy components, to peak at around 3.6% this year, down from 4.0% previously.