Prices paid to U.S. producers for goods other than fuel and food rose more than forecast in May, compounding worries about inflation that have rattled global financial markets and caused some central banks to raise interest rates.
The so-called core rate increased 0.3 percent, the most in three months, after a 0.1 percent rise, the Labor Department said today in Washington. Economists surveyed by Bloomberg News expected a 0.2 percent gain. Prices including food and fuel rose 0.2 percent after 0.9 percent jump in April.
The details, in a handy table:
I've noted in the past that, to the extent producer prices are related to consumer price outcomes at all, recent evidence seems to suggest that is the finished goods part of the report that is most reliably related to the CPI. Though the rate of change in finished good prices last month was substantially less bad than the rate of change in intermediate goods and core materials, the trend in core PPI has still not been, of late, in the comfort-zone direction:
The conclusions being drawn about what it all means for monetary policy exhibit a certain air of inevitability. From yet another Bloomberg release:
The dollar rose a seventh straight day against the euro after a report showing gains in U.S. wholesale prices boosted speculation the Federal Reserve will keep lifting interest rates to stem inflation.
No balance accepted from the other news today, suggesting a consumer spending cool down in May. From the Wall Street Journal:
Consumer spending weakened but still inched up during May, while wholesale prices outside the energy sector climbed more than expected, supporting the case for a Federal Reserve rate increase this month.
Retail sales rose by a seasonally adjusted 0.1%, a tad better than expected, Commerce Department data Tuesday showed. Demand in April and March was revised higher, up 0.8% and 0.7%...
"I think we're still waiting on the core [consumer prices], but Tuesday's data do suggest a bit more pressure in the pipeline," said Scott Brown, chief economist at Raymond James and Associates in St. Petersburg, Fla. "For retail sales, there were upward revisions for the two previous months. The consumer is hanging in there, and inflation pressures are continuing to increase. It's consistent with the Fed raising rates again."
OK, then. We'll all wait for the core consumer price report, due tomorrow.
If you are interested, the pictures above (and bonus slides!) are here: