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The Bureau of Labor Statistics reported that the U.S. Producer Price Index (PPI) rose 1.1% in May, exceeding economist expectations of 0.7%. This monthly increase, which matches the growth seen in April, brings the 12-month wholesale inflation rate to 6.5%, the highest level since November 2022. The surge is primarily attributed to a 10.7% increase in energy costs, with wholesale gasoline prices rising 23.4%.
Wholesale prices increased 1.1% in May, driven largely by a 2.8% rise in final demand goods prices.
Energy costs accounted for approximately 80% of the rise in final demand goods, with wholesale gasoline prices jumping 23.4%.
Core PPI, which excludes food and energy, rose 0.4% in May.
The 12-month wholesale inflation rate reached 6.5%, the highest recorded since November 2022.
Market expectations suggest the Federal Reserve will likely hold interest rates steady at its upcoming meeting.
The increase was largely driven by a 10.7% jump in energy costs, which accounted for nearly 80% of the rise in final demand goods prices.
The 1.1% monthly increase in the producer price index was higher than the 0.7% increase that economists surveyed by Dow Jones had anticipated.
The 12-month wholesale inflation rate is 6.5%, marking the highest annual headline rate since November 2022.
Markets are pricing in a near 100% probability that the Federal Reserve will hold interest rates steady at its next meeting, with some expectations of potential rate hikes later in the year.
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