Shoppers carry Ross bags in San Francisco, California, US, on Wednesday, June 10, 2026. <\/p>\n
David Paul Morris | Bloomberg | Getty Images<\/p>\n
Wholesale prices rose more than expected in May, indicating that pipeline inflationary pressures are percolating higher, the Bureau of Labor Statistics reported Thursday.<\/p>\n
The producer price index<\/a>, a measure of final demand costs, increased a seasonally adjusted 1.1% on the month, putting the 12-month wholesale inflation rate at 6.5%. Economists surveyed by Dow Jones had been looking for a monthly move of 0.7%.<\/p>\n The annual headline inflation rate was the highest since November 2022. The monthly gain matched the April increase.<\/p>\n However, excluding food and energy, the so-called core PPI accelerated 0.4%, compared with the consensus view of 0.5%, indicating that rising fuel prices are causing much of the inflationary burden. <\/p>\n Taking out food, energy and trade services, the PPI accelerated 0.8%, the biggest one-month move since March 2022. On a 12-month basis, the core excluding trade services rose 5.1%, the most since October 2022. <\/p>\n Most of the acceleration in the PPI \u2014 nearly 80% \u2014 came from a 2.8% surge in final demand goods prices, the biggest increase ever in a data series going back to December 2009. In turn, 80% of that rise came from a 10.7% jump in energy. Gasoline prices rose 23.4% at the wholesale level, the BLS said.<\/p>\n Another significant contributor, on the services side, came from portfolio management fees, which increased 4.8% during a strong May for the stock market.<\/p>\n The report comes a day after the BLS reported that headline consumer price inflation<\/a> surged to 4.2% in May, boosted largely by a surge in energy prices due to the Iran war<\/a>. However, monthly readings indicated a less severe shock, with core prices rising just 0.2%, putting the 12-month reading at 2.9%.<\/p>\n Still, the current state of inflation is likely to keep the Federal Reserve on the sidelines<\/a> for the foreseeable future. The central bank’s Federal Open Market Committee releases its next interest rate decision Wednesday, and market pricing is indicating a near 100% probability of a hold.<\/p>\n Beyond that, traders are pricing in no chance of a cut through the year and a better than 60% probability that the next move will be a hike, likely coming in December.<\/p>\n