A shopper carries a Ross bag on Wednesday, June 10, 2026 in San Francisco, California, USA.
David Paul Morris | Bloomberg | Getty Images
Wholesale prices rose more than expected in May, the Bureau of Labor Statistics reported Thursday, showing that inflationary pressures in the pipeline are becoming more pervasive.
The producer price index, a measure of final demand costs, rose by a seasonally adjusted 1.1% month-on-month, bringing the 12-month wholesale inflation rate to 6.5%. Economists surveyed by Dow Jones had expected a 0.7% increase from last month.
The annual headline inflation rate was the highest since November 2022. The monthly rate of increase matched the rate of increase in April.
However, the so-called core PPI, which excludes food and energy, accelerated by 0.4% compared with the consensus view of 0.5%, indicating that higher fuel prices are causing much of the inflation burden.
PPI, which excludes food, energy and trade services, rose 0.8%, the biggest single-month increase since March 2022. On a 12-month basis, core excluding trade services rose 5.1%, the biggest rise since October 2022.
Most of the PPI acceleration (nearly 80%) was due to a 2.8% rise in final demand goods prices, the largest increase on record in a series of data dating back to December 2009. Also, 80% of that increase was due to a 10.7% increase in energy. Gasoline prices rose 23.4% at the wholesale level, according to the BLS.
Another big factor on the service side was portfolio management fees, which rose 4.8% in May during a strong stock market.
The report was released a day after the BLS reported that headline consumer price inflation rose to 4.2% in May, largely due to soaring energy prices due to the Iran war. But monthly statistics showed the shock was less severe, with core prices increasing by just 0.2%, bringing the 12-month reading to 2.9%.
Still, given the current state of inflation, the Fed is likely to remain on the sidelines for the time being. The central bank’s Federal Open Market Committee will announce its next interest rate decision on Wednesday, but market prices indicate there is a nearly 100% chance of it remaining unchanged.
Beyond that, traders are pricing in a more than 60% chance of the next rate hike, likely in December, with no chance of a rate cut this year.
Earlier in the day, the European Central Bank voted to raise its benchmark interest rate by a quarter of a percentage point to stem a surge in inflation. Few Fed officials have expressed interest in similar tightening, instead insisting on being patient as they wait to see if the energy supply shock subsides and inflation returns to the central bank’s 2% target.
