HomeInflationProducer prices inch 0.2% higher on energy prices, inflation in check

Producer prices inch 0.2% higher on energy prices, inflation in check

U.S. producer prices picked up in May, but they were less than expected despite increasing costs at the pump.

The Producer Price Index (PPI) rose by 0.2% last month, according to a report on Tuesday released by the Labor Department. The PPI measures prices at the factory door and inflation pressures before they reach the consumer.

"This clearly suggests there’s no inflation yet," Anika Khan, an economist at Wachovia Corp. in Charlotte, North Carolina, was quoted on Bloomberg. Price gains are "a gasoline story… companies can’t pass on the prices because the consumer is not in a situation to pay right now."

The PPI has fallen 5.0% in the past twelve months and is the biggest year-over-year decline since 1949.

The May jump follows a 0.3% rise in April when energy prices were down 0.1% and food costs climbed 1.5%. There has since been a reversal. Food costs declined 1.6% last month while energy prices rose 2.9%. The latter was driven mostly higher by gasoline and diesel prices, which surged 13.9% and 4.5%, respectively.

The core PPI, which excludes volatile food and energy costs, fell 0.1% after a 0.1% increase a month earlier. It was the first decline since October 2006.

The government’s Consumer Price Index (CPI) for May is scheduled for release on Wednesday at 8:30 AM ET. The CPI measures inflation pressures at the consumer level.


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