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Economy in Brief

U.S. Producer Price Inflation Picks Up in May
by Tom Moeller  June 14, 2022

• Energy prices continue to strengthen.

• Core goods prices remain strong.

• Services prices improve after an April decline.

Price inflation at the wholesale level remains heated. The Producer Price Index for Final Demand increased 0.8% during May (10.8% y/y) after rising 0.4% in April, revised from 0.5%. These last two gains follow three consecutive months of 1.1%-to-1.6% increase. The latest increase matched expectations in the Action Economics Forecast Survey. The series dates back to November 2009.

Producer prices less food, energy & trade services increased 0.5% (6.8% y/y) in May after increasing 0.4% in April. A 0.6% rise had been expected for the PPI less food & energy.

A 5.0% increase in energy prices (45.3% y/y) led the PPI higher last month. It was the fifth consecutive month of strong increase. Gasoline prices surged 8.4% and were up by two-thirds y/y. Home heating oil prices rose 10.6% (116.8% y/y) and natural gas prices surged 6.2% (29.5% y/).

Food prices were fairly steady during May (13.0% y/y) after significant gains in the prior four months.

The PPI for goods less food & energy gained 0.7% (9.7% y/y) following two consecutive months of 1.1% increase. Prices for final demand finished goods less food & energy increased 0.8% (8.8% y/y). Finished consumer goods prices less food & energy rose 0.9% in May (8.4% y/y) following a 0.6% increase. Durable consumer goods prices rose 0.7% last month (8.9% y/y) after four months of roughly 0.9%. Core nondurable consumer goods prices rose 1.0% (8.1% y/y), the strongest increase in three months. Prices for private capital equipment rose 0.7% (9.3% y/y) after increasing 1.2% in April.

Services prices rose 0.4% during May (7.6% y/y) following a 0.2% April decline. Trade services prices also increased 0.4% last month (13.6% y/y) after falling 0.6%. Services prices less trade, transportation & warehousing edged 0.1% higher in May (3.0% y/y) after falling 0.2% in April.

Construction product prices increased 0.4% in May (19.0% y/y) after surging 3.7% in April.

Intermediate goods prices jumped 2.3% (21.6% y/y) due to a 4.6% gain (47.5% y/y) in processed fuel costs.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver's USECON database. Further detail is contained in PPI and PPIR. The expectations figures are available in the AS1REPNA database.

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