U.S. Producer Inflation Surpasses Analyst Expectations in May
The Producer Price Index (PPI) climbed 1.1% last month, matching April's pace and accelerating sharply from the 0.7% advance recorded in March — coming in well above the 0.7% monthly gain markets had anticipated.
On a yearly basis, final demand prices soared 6.5% in May, edging past the 6.4% consensus forecast and marking the highest annual headline rate since November 2022, when the index had surged 7.4%.
Goods prices drove the bulk of the monthly advance, accounting for nearly 80% of the overall rise with a 2.8% jump — the largest monthly increase since the series launched in December 2009. Energy prices powered much of that surge, spiking 10.7%, while food prices ticked up 0.6% and goods excluding food and energy rose 0.8%.
Gasoline proved to be the single largest contributor to the goods spike, with prices exploding 23.4% in May alone. Diesel fuel, jet fuel, plastic resins, industrial chemicals, and natural gas liquids also posted gains. Bucking the trend, pork prices retreated 10.1%, while residential electric power and sanitary paper products also softened.
Services inflation, by contrast, cooled — rising 0.3% in May after a 0.7% climb in April. Portfolio management fees led the services advance with a 4.8% jump, accounting for more than 40% of the overall services gain. Transportation and warehousing services climbed 2.6%, and services excluding trade, transportation and warehousing rose 0.7%. Trade service margins, however, contracted 1.1%, with machinery and equipment wholesaling margins falling 1.9%, and fuels retailing and residential real estate loans also declining.
Stripping out food, energy and trade services, the core PPI jumped 0.8% in May — the sharpest monthly core reading since March 2022. Over the 12 months through May, core producer prices rose 5.1%, the largest annual gain since October 2022, underscoring the persistence of upstream price pressures working their way through the U.S. economy.
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