Producer Prices: Upward Trend in Inflation Continues
Producer prices for final goods and services rose 0.5 percent in May, while pipeline prices also picked up. Over the past year, the PPI for final demand is up 3.1 percent, consistent with moderate firming in inflation.
Energy and Then Some
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Producer price inflation came in hotter than expected in May amid a sizeable jump in energy prices. Over the past year, the PPI is up 3.1 percent, which is the biggest gain in six years.
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Although energy has been a key driver of the pickup in PPI, prices are trending up more broadly. Our preferred measure of core PPI—ex food, energy and trade services—rose to 2.6 percent on a year-ago basis, which is up from 2.1 percent last May.
More to Come
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Prices for services rose 0.3 percent in May and have drifted higher over the past year. Transportation & warehousing has seen the biggest gain as the sector contends with increased energy costs.
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Pipeline pressures picked up in May. Input costs for processed and unprocessed goods as well as services have all increased more than 3 percent over the past year and suggest further upward pressure on final selling prices in the months to come.
Author
Wells Fargo Research Team
Wells Fargo
