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US producer prices up 0.4 percent in May
Posted On Jun 15 2016
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The producer-price index gained 0.4 percent, more than forecast, after a 0.2 percent increase the prior month, a Labor Department report showed Wednesday in Washington.
Economists had expected import prices to rise by 0.8% compared to the 0.3% increase originally reported for the previous month.Import prices for petroleum and petroleum products advanced 17.4% in May, an acceleartion from April’s 11.0% rise. Economists had expected prices to rise by 0.3%.
U.S. producer prices rose for a second straight month in May as the cost of energy products and services increased, but the lingering effects of a strong dollar and lower energy prices will likely keep inflation tame for a while. Core prices had been expected to tick up by another 0.1%.
The so-called core PPI was up 0.8% in the 12 months through May.
Overall wholesale prices are still down 0.1 percent from a year ago while core prices are up a modest 1.2 percent.
In May, auto sales rose 0.5 percent after racing 3.1 percent in April. Projections ranged from little change to an advance of 0.6 percent. Receipts at service stations increased 2.1 percent, reflecting recent increases in gasoline prices.
US import prices recorded their biggest increase in more than four years in May on rising costs of petroleum and other products, pointing to firming inflation as the drag from a strong dollar and lower oil prices fades. Those costs were up 1.2 percent from May 2015.
The Federal Reserve, which finishes a two-day meeting on monetary policy Wednesday afternoon, has kept interest rates at an ultra-low level to boost consumer inflation up towards a target of two per cent.
A 1.2 percent jump in prices for trade services was partly offset by a 0.6 percent drop in prices for transportation and warehousing services and a 0.2 percent dip in prices for other services. But with the dollar weakening 1.5 percent against the currencies of the United States’ main trading partners this year and oil prices near $50 per barrel, that drag is starting to lift.
