U.S. producer prices increased more than was expected during May as the price of gasoline rebounded. However, pressure of underlying inflation remained muted, that could help to argue against a scaling back in monetary stimulus be the Fed.
On Friday, the U.S. Department of Labor said its producer price index, which is seasonally adjusted increased by 0.5% in May, as there was an increase in the prices of food. Wholesale prices in April had fallen by 0.7%.
A survey of Wall Street economists forecasted that prices received by factories, refineries and farms would be 0.1% higher in May.
In the past 12 months from May of 2012 through May of 2013, wholesale prices were up 1.7% after increasing only 0.6%. Despite last month’s uptick, underlying pressures on prices remained somewhat muted and domestic demand was modest making it difficult for producers to pass on to consumers increased costs.
Excluding the volatile cost of food and energy, wholesale prices were up by 0.1% in May for the second consecutive month. Over the last 12 months, through the end of May, the PPI was up by 1.7% after increasing the same amount in both April and May.
With gasoline prices rebounding this past week, the prices of food and energy could show a jump when new figures are released in early July for U.S. producers.