- Reuters/Vasily Fedosenko
The producer price index (PPI) rose 0.4% in May, according to the Bureau of Labor Statistics.
More than one-third of the gain in the headline index of prices producers paid was due to a rise in gas prices, which climbed 6.6%. Jet-fuel prices also rose.
The costs of healthcare services, which gained momentum from the end of last year through February, slipped in May by 0.1%.
PPI is used as a forward-looking indicator of inflation because if producers are paying more for their purchases, they would most likely pass on these costs to consumers via higher shelf prices.
“Much of the increase over the month came from higher energy prices, with little indication of broad-based price gains outside of energy,” said PNC’s Stuart Hoffman and Gus Faucher in a note.
“Inflation should gradually pick up over the next couple of years as wage growth strengthens, higher energy prices flow through into other goods and services, and the weaker dollar in 2016 boosts import prices, but it will remain historically low.”
Producer prices fell 0.1% year-over-year, as estimated.
Economists had forecast that the PPI for final demand rose 0.3% month-on-month in May, according to Bloomberg.
PPI excluding the costs of food and energy rose 0.3% month-on-month, and rose 1.2% year-on-year. It had been estimated at 0.1% month-on-month, and 1% year-on-year.