Workers inspect a Rivian R1T electric vehicle (EV) pickup truck at the assembly line at the company’s manufacturing facility in Normal, Illinois, USA, on Monday, April 11, 2022.
Jamie Kelter Davis | Bloomberg | Getty Images
Wholesale prices rose at a rapid pace in May as inflationary pressures rose on the U.S. economy, the Bureau of Labor Statistics reported on Tuesday.
The producer price index, a measure of the prices paid to producers of goods and services, rose 0.8% during the month and 10.8% last year. The monthly rise was in line with Dow Jones estimates and doubled at 0.4% in April.
Excluding food, energy and trade, the so-called basic PPI rose 0.5% during the month, slightly below the 0.6% estimate, but an increase over reading 0.4% from the previous month. Year-on-year, the basic measure rose by 6.8%, as did the April gain.
The two PPI measures remained close to their all-time highs: 11.5% for the incumbent and 7.1% for the core, both reached in March.
The data is significant because wholesale prices are fueled by consumer prices, which have been at their highest levels since December 1981. The consumer price index rose by 8.6% year-on-year. May, defying hopes that inflation would have peaked in the spring.
Federal Reserve officials are watching inflation figures closely. Markets now expect central bank officials to raise short-term benchmark rates by 75 basis points when they conclude their two-day meeting on Wednesday.
In terms of wholesale prices, energy accounted for much of May’s gains. The final energy demand index rose 5% during the month, as part of a 1.4% increase in final demand goods. The imbalance between goods and services has been at the core of inflationary pressures, as consumer demand has shifted sharply in an economy that is generally more dependent on services.
Within this energy gain, gasoline increased by 8.4%, while several other fuel categories also increased.
The services index rose 0.4%, with transport and storage services accounting for more than half of the gain. Rises were eased by falling fuel and lubricants, portfolio management and room rentals.
Stock market futures pointed to a rebound after launch. Government bond yields fell after big gains on Monday, with the 10-year benchmark recently yielding around 3.32%.