U.S. wholesale inflation jumps 1.1% in May as oil price surge lifts annual rate
The Producer Price Index rose 1.1% in May, taking the annual wholesale inflation rate to 6.5%, driven largely by higher oil prices linked to the conflict in Iran.
The U.S. Bureau of Labor Statistics reported that the Producer Price Index (PPI) increased 1.1% in May, raising the year-over-year rate to 6.5%, the highest level in more than three years. The rise matches the monthly gain recorded in April and represents the fastest monthly increase since March 2022. Analysts attributed most of the gain to a war-driven surge in oil prices.
The PPI, which tracks average price changes received by domestic producers, is watched as a possible early indicator of consumer-price trends, although higher wholesale costs are not always fully passed through the supply chain. Core PPI, which excludes food and energy, rose 0.4% from April and held at a 4.9% annual rate. When the volatile “trade services” category is also excluded, the index rose 0.8% in May and 5.1% annually, the strongest increase since October 2022.
"And businesses at both the wholesale and retail level can act as a buffer to consumers, absorbing at least some of the price growth if they’re concerned about their customers’ ability to stomach higher prices," wrote Elizabeth Renter, senior economist at NerdWallet.
Renter added that the latest figures suggest inflationary pressures could continue to affect households in the coming months. The higher cost of gasoline also contributed to a three-year-high 4.2% rise in the Consumer Price Index for May.
