US Producer Prices Rise 6.5% Annually in May

U.S. producer prices surged in May, posting their largest annual increase in more than three years and signaling persistent inflationary pressures at the wholesale level. The Producer Price Index for final demand rose 1.1 percent from April to May, according to a report released Thursday by the Bureau of Labor Statistics. Over the past 12 months, the index climbed 6.5 percent, the highest annual rate since November 2022.

The increase significantly exceeded economists' expectations, which had forecast a monthly gain of 0.7 percent and an annual rise of 6.4 percent. The acceleration was driven overwhelmingly by a sharp increase in energy prices, which rose 10.7 percent in May alone. Gasoline prices surged 23.4 percent, accounting for more than half of the overall monthly advance. Prices for diesel fuel, jet fuel, industrial chemicals, and plastic resins also climbed.

The data suggests that high energy costs, influenced by geopolitical tensions including the ongoing conflict in Iran and the closure of the Strait of Hormuz, are feeding directly into production costs. Final demand goods prices rose 2.8 percent in May, the largest monthly increase since the data series began in 2009,...