U.S. producer prices jumped 1.1% in May, well above expectations, pushing the annual wholesale inflation rate to 6.5% — the highest since November 2022. The move was driven largely by a sharp increase in energy costs, which continues to filter through the supply chain.
Core PPI, which excludes food and energy, rose 0.4% MoM, slightly below forecasts. However, broader measures of underlying inflation still showed firm pressure, with service-sector prices and trade costs also contributing to the upside surprise.
The bulk of the monthly increase came from goods prices, which surged 2.8%, the strongest gain in the series’ history. Energy alone jumped 10.7%, with gasoline prices seeing an outsized increase at the wholesale level.
The report adds to evidence that inflationary pressures remain persistent in the U.S. economy, reinforcing expectations that the Federal Reserve will keep interest rates elevated for longer. Market pricing continues to reflect a high probability of no rate cuts this year, with some expectations shifting toward a potential hike later in the year.
