The US Producer Price Index rose by 1.1% in May, the same as in April and above the 0.7% gain expected in a survey compiled by Bloomberg as of 7:30 am ET.
Energy prices rose by 10.7%, faster than a 7.5% gain in the previous month. Gasoline prices surged by a 23.4% after a 15.2% gain in the previous month. Food prices increased by 0.6% after a 0.2% gain in April.
After excluding food and energy prices, core PPI increased by 0.4%, slower than the 0.5% gain expected and following a 0.7% gain in the previous month.
PPI was up 6.5% year-over-year in May from a 5.7% gain in April, the strongest pace since November 2022, while core PPI remained at a 4.9% year-over-year gain. The year-over-year rate for PPI excluding food, energy and trade services increased to 5.1% from 4.4% in the previous month,
The monthly producer price index, or PPI, reported by the Bureau of Labor Statistics measures the index level of prices received by producers for products such as energy, food, vehicles, and services. The core measure, excluding the volatile food and energy components, is a measure of underlying inflation.
Sharply higher prices are a sign of demand, but an increase at the producer level without a pass-through to the consumer level would suggest smaller profits at the retail level. As a result, the stock reaction depends on the movements at both levels. Higher inflation is generally a negative for bonds.