U.S. producer prices increased solidly last month, for a second straight month, boosted by a surge in the cost of hotel accommodation and gains in a range of other services, pointing to a steady pickup in underlying inflation pressures.
Figures released Tuesday by the Labor Department revealed producer prices excluding food, energy and trade services rose 0.4% in May, matching April’s gain. The so-called core PPI increased 2.3% in the 12 months through May after rising 2.2% in April.
Lower energy and food prices, however, partially eased the increase in services last month, which led to PPI for final demand to edge up 0.1% in May after gaining 0.2% in April. In the 12 months through May, the index climbed 1.8%, slowing from April’s 2.2% advance.
Economists had forecast the PPI would nudge up 0.1% in May and rise 2.0% on a year-on-year basis.
The steady rise in underlying producer prices likely supports the Federal Reserve’s view that the weak inflation readings are probably only temporary.
