Producer prices for finished goods rose a seasonally adjusted 0.3 percent last month, less than half as much as in April, the Labor Department reported yesterday. Food prices continued to rise rapidly but energy prices stabilized.

The May increase, which about matched the average monthly rate during the first quarter, left finished goods prices 2.6 percent higher than they were in May 1986.

Consumer food prices rose 1.4 percent on top of a 1.5 percent increase in April, the department said. But excluding foods, finished consumer goods prices fell 0.2 percent during the month, their first decline since last July.

The May producer price increase was the smallest since a 0.1 percent jump in February and a sharp contrast to the 0.7 percent boost in April.

"These good price numbers ought to knock the wind out of the sails of those people who were warning that inflation was going to take off," Jerry Jasinowski, chief economist for the National Association of Manufacturers, told The Associated Press.

Analysts said declines in May wholesale prices for a wide range of consumer goods -- excluding food -- should soon slow the rate of increase in retail prices.

"The inflationary process has begun and is pointing to a rate of 4.5 to 5 percent for the year," said Allen Sinai, chief economist for Shearson Lehman Bros. "But fears of inflation at 6 percent to 7 percent have for now gone by the wayside."

Other economists agreed that the previous month's 0.7 percent jump in prices had sent a misleading signal.

"The April increase was a fluke and the market got too excited about it," said David Wyss, chief economist for Data Resources Inc. of Lexington, Mass. "Excluding food and energy, wholesale prices were up only 0.1 percent. That certainly suggests there is little reason to fear inflation in the near future."

The producer price indexes measure changes in prices charged by producers when a product is first sold. Finished goods, such as a loaf of bread, are in their final form. Intermediate goods are partially processed, such as flour from which the bread is made, while crude goods would include the wheat from which flour is made.

The producer price index for intermediate goods rose 0.5 percent, up from 0.3 percent in April, largely on the basis of a 3.2 percent jump in prices of foods and feeds. The increase in intermediate foods and feeds prices was the biggest since September 1983.

The index for crude materials rose 3.1 percent, again due largely to a 4.8 percent increase in foodstuffs and feedstuffs prices.

Finished energy goods prices were unchanged for the month after going up 2.1 percent in April and rising at a 52.8 percent annual rate in the first quarter.

However, declines during 1986 lowered the index so much that in May it was 3.3 percent lower than it was a year earlier.

Gasoline prices fell 1.1 percent after going up 2.3 percent in April. Home heating oil prices continued to rise, up 1.4 percent in May after a 1.8 percent increase the month before. In the past year, heating oil prices were up 10.1 percent while gasoline prices rose 3.6 percent.

Finished capital goods prices inched up 0.1 percent in May and were up 2 percent in the past year.

During the past 12 months, the biggest increases other than for heating oil were for jewelry, up 10.3 percent; prescription drugs, up 9.9 percent; nonprescription drugs, up 5.1 percent, and new cars, up 4.8 percent.

The largest price declines were for roasted coffee, down 19.2 percent; natural gas, down 12.6 percent, and vehicle tires, down 1.7 percent.