(Photo: REUTERS)
The Labor Department said Friday that wholesale inflation gauged in the Producer Price Index(PPI) posted the largest gain in nearly 3 years. The PPI is not as widely cited or used as the Consumer Price Index (CPI), which is due out next week, but it is still considered to be a good indicator of inflation.
U.S. producer prices in May increased 0.5 percent last month, the largest gain since September 2012, following a 0.4 percent decline in April. The cost of gasoline increased by 17 percent, while food rose by 0.8 percent.
Economists had forecast the PPI rising 0.4 percent last month and falling 1.1 percent from a year ago, but according to the Labor Department, through May the PPI on the year fell 1.1 percent, marking the fourth straight 12-month decrease. Prices dropped 1.3 percent in the 12 months through April, which is the biggest fall since 2010.
The trade services component increased 0.6 percent in May after falling by 0.8 percent the prior month, though that largely reflects profit margins at retailers and wholesalers. Profit margins also increased at services stations, an unsurprising number considering the rise in gasoline prices.
Excluding food, energy and trade services the PPI actually fell by 0.1 percent last month after ticking up 0.1 percent in April. The so-called core PPI was up 0.6 percent in the 12 months through May.
