Wholesale prices in the United States rose modestly last month from a year earlier, another sign that inflationary pressures remain subdued.
The U.S. Labor Department reported on Thursday that the producer price index (PPI), which measures inflation at the upstream end of the supply chain, rose 2.6% in May 2024 from a year earlier. From April to May, producer prices rose 0.1% after recording a 0.2% decline in the previous month.
Excluding volatile food and energy prices, wholesale costs rose 0.1% from April and 3% from May last year.
The reading was slightly lower than economists’ expectations.
The report was published a day after the Labor Department said consumer prices rose modestly by 0.1% from April and 2.4% from a year earlier.
Since returning to the White House, President Trump has imposed 10% tariffs on almost every country in the world, including specific taxes on steel, aluminum and vehicles. Importers in the US pay the taxes and typically pass the cost on to consumers in the form of higher prices. As a result, most economists expect inflation to rise again by the end of the year.
So far, the tariffs have yet to have a significant impact on overall price levels.
Wholesale prices are often used as a leading indicator of consumer inflation trends. Economists also watch the data because several of its components, including health care and financial services, are included in the Federal Reserve’s preferred index for measuring inflation, the Personal Consumption Expenditures (PCE) Index.
Inflation began to rise for the first time in decades in 2021 as the economy rebounded sharply from the COVID-19 shutdown. That prompted the Federal Reserve to raise interest rates 11 times in 2022 and 2023. Higher borrowing costs helped to reduce inflation from its peak in 2022, and last year the central bank was confident enough to cut rates three times.
But this year, the Fed has turned cautious as it waits to see how Trump’s trade policies will actually affect inflation. The central bank is expected to keep interest rates unchanged at its meetings next Tuesday and Wednesday.
