5 hours ago - Economy
Higher energy costs drive producer price surge
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The war-driven inflation hit is spreading beyond energy and deeper into supply chains.
Driving the news: Producer prices rose 1.1% in May, matching April's increase and pushing annual wholesale inflation to 6.5%, the highest since late 2022.
- The surge was driven by higher energy costs. But the report also shows brisk price increases across a range of non-energy goods and industrial inputs.
By the numbers: Nearly 80% of May's increase in producer prices came from goods, which rose 2.8% — the largest increase since the current series began in 2009.
- Energy prices jumped nearly 11%, led by a surge of more than 20% in gasoline prices.
A narrower measure that excludes energy shows wholesale inflation was still hot.
- Excluding food, energy and trade services, PPI gained 0.8% in May, the largest monthly increase since March 2022.
- Price increases extended beyond fuel into industrial chemicals, plastic resins and other production inputs, a warning that cost pressures are spreading through the supply chain.
The bottom line: Businesses are facing a widening source of cost increases, raising the odds that consumers might have to absorb more of the impact.
- "We now have a more complete picture of the U.S. inflation situation, with the main question right now being who will have to absorb the widespread cost pressures," Peter Boockvar, chief investment officer of OnePoint BFG Wealth Partners, wrote in a note Thursday morning.
