Executive Briefings

U.S. Producer Prices Unchanged; Services Costs on the Rise

U.S. producer prices were unchanged in May as energy costs recorded their biggest decline in more than a year, suggesting a moderation in inflation after a rise at the start of the year.

Inflation at the factory gate, however, remains supported by sustained increases in the cost of services as well as a softening dollar, which is lifting prices of some imported goods.

"Inflation down at the producer level of the economy's factory-to-consumer supply chain remains on the warm side, which is in keeping with the economy moving beyond full employment," said Chris Rupkey, chief economist at MUFG in New York.

The Labor Department said that last month's unchanged reading in its producer price index for final demand followed a 0.5 percent jump in April.

In the 12 months through May the PPI increased 2.4 percent, retreating from April's 2.5 percent surge, which was the biggest yearly increase since February 2012. Last month's inflation readings were broadly in line with economists' expectations.

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Inflation at the factory gate, however, remains supported by sustained increases in the cost of services as well as a softening dollar, which is lifting prices of some imported goods.

"Inflation down at the producer level of the economy's factory-to-consumer supply chain remains on the warm side, which is in keeping with the economy moving beyond full employment," said Chris Rupkey, chief economist at MUFG in New York.

The Labor Department said that last month's unchanged reading in its producer price index for final demand followed a 0.5 percent jump in April.

In the 12 months through May the PPI increased 2.4 percent, retreating from April's 2.5 percent surge, which was the biggest yearly increase since February 2012. Last month's inflation readings were broadly in line with economists' expectations.

Read Full Article