An increase in gas and food costs led to the rise in the measure of wholesale prices in May. Inflation was mild outside the volatile categories. The Labor Department said that the producer price index went up0.5 percent in May from the previous month. Gas prices increased 1.5 percent in May while food costs gained 0.6 percent.
The increase in May came after a 0.7 percent drop in April and a 0.6 percent decline in March. Both were driven by the drops in gas prices. Core prices, excluding food and energy, increased 0.1 percent in May. It matched the gain seen in April.
The index measures the price changes before they got in the hands of the consumers. Economists said that there are no actual inflationary pressures in the economy. Aside from the volatility of gas prices, consumer and wholesale inflation went up slowly in the past year. Both core and overall indexes increased 1.7 percent in the 12 months that ended in May. The reading was below the Federal Reserve’s 2 percent inflation goal and allows the Fed to continue with its stimulus program to bolster more economic growth.
The mixture of modest economic growth and high jobless rate has limited the increase in wages. It made it difficult for retailers and other companies to increase their prices. Most of the increase in food costs in May came from a 41.6 percent gain in the cost of eggs, which was the largest on record. The increase also reflected the high demand in the US and overseas. Mother’s Day and The Memorial Day holidays were said to be the cause of more demand in the United States. Mexico imported more eggs from the United States due to a bird flu epidemic.
Around two-thirds of the 0.1 percent gain in core prices came from the 0.4 percent increase in the wholesale price of pickup trucks. The recovery of the housing sector created more business for contractors and landscapers, who purchased more trucks.