A report released by the Labor Department on Tuesday showed producer prices in the U.S. increased by more than expected in the month of May, with the annual rate of growth reaching a record high.
The Labor Department said its producer price index for final demand advanced by 0.8 in May after climbing by 0.6 percent in April. Economists had expected another 0.6 percent increase.
Energy prices jumped by 2.2 percent in May after tumbling by 2.4 percent in April, while food prices spiked by 2.6 percent after surging up by 2.1 percent in the previous month.
Excluding prices for food, energy, and trade services, core producer prices rose by 0.7 in May, matching the increase seen in the previous month. Core prices were expected to rise by 0.5 percent.
The report said prices for services climbed by 0.6 percent for the second straight month amid a 1.9 percent surge in prices for transportation and warehousing services.
Compared to the same month a year ago, producer prices in May were up by 6.6 percent, reflecting the largest increase since 12-month data were first calculated in November 2010.
The annual rate of core producer price growth also accelerated to a record high of 5.3 percent in May from 4.6 percent in April.
“Looking past the noise, producer price increases will slow as supply constraints relax and recalibrate to demand in the second half of 2021,” said Mahir Rasheed, U.S. Economist at Oxford Economics.
He added, “With inflation expectations cooling and fiscal stimulus fading, we continue to share the Fed’s view that we are not entering an environment of spiraling prices.”
Last Thursday, the Labor Department released a separate report showing consumer prices in the U.S. increased by more than expected in the month of May.
The Labor Department said its consumer price index rose by 0.6 percent in May after climbing by 0.8 percent in April. Economists had expected consumer prices to increase by 0.4 percent.
About one-third of the increase in consumer prices was due to a 7.3 percent spike in prices for use cars and trucks. Food prices also rose by 0.4 percent, while energy prices were unchanged.
Excluding food and energy prices, core consumer prices climbed by 0.7 percent in May following a 0.9 percent advance in April. Core prices were also expected to rise by 0.4 percent.
The continued increase in core prices reflected the jump in prices for used cars and trucks as well as increases in prices for household furnishings and operations, new vehicles, airline fares, and apparel.
The report also showed consumer prices in May were up by 5.0 percent compared to the same month a year ago, reflecting the biggest spike since August of 2008.
The annual rate of core consumer price growth also accelerated to 3.8 percent in May, which represents the biggest jump since June of 1992.
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