US wholesale inflation rose slightly in May, driven higher in part by costlier goods.
The latest Producer Price Index, a closely watched measurement of wholesale inflation, showed that prices paid to producers rose 0.1% in May, lifting the annual rate to 2.6%, according to Bureau of Labor Statistics data released Thursday.
Economists were expecting that prices would rise 0.2% from April and 2.6% for the 12 months ended in May.
The upswing marked a turnabout from a 0.2% drop in April, which was driven largely by wholesalers and retailers’ margins being squeezed, which economists attributed to higher tariffs.
Revisions to April’s PPI data showed that margins weren’t eaten up as much as previously thought: The initially reported 1.7% plunge in the trade services category was revised to a 0.5% drop. In May, trade services posted an increase of 0.4%, according to the report.
Goods-related inflation picked up for the month, rising 0.2%, while services inched higher by 0.1%.
During the past year, the overall PPI was heavily influenced by swings — both positive and negative — in food and energy. Both categories in May, however, were tame, as foods rose by 0.1% and energy prices were unchanged.
About 80% of the increase seen in goods prices last month came from areas other than food and energy. Economists have recently indicated that the price pressures from tariffs would show up first in “core goods” (goods that exclude food and energy).
Monthly data can be volatile; however, the prices producers received for durable consumer goods shot 0.4% higher in May, logging the largest monthly increase that category has seen since January 2023, BLS data shows.
“The inflation fires are still percolating down at the producer level for goods prices, and price increases there may be coming soon to the consumer level at a store near you,” Chris Rupkey, chief economist at FwdBonds, wrote in commentary Thursday.
Excluding food and energy, which are categories that typically have more volatility, core PPI rose slightly as well, increasing 0.1% from April. On an annual basis, core PPI inflation eased slightly to 3% from 3.1%.
PPI serves as a potential bellwether for retail-level inflation in the months ahead.
On Wednesday, the latest Consumer Price Index data showed that overall inflation rose less than expected for goods and services commonly purchased by Americans.
Economists warn, however, that President Donald Trump’s sweeping tariffs are expected to eventually result in some price increases for consumers.
This story is developing and will be updated.
