NEW YORK (Foxnews): Producer prices rose in May by the most on record as the reopening of the U.S. economy from COVID-19 lockdowns gathered momentum.
The producer price index for final demand last month increased at a 6.6% annual pace, quickening from last month’s 6.2% gain, the Labor Department said. The annual reading for May was the hottest since recordkeeping began in November 2010.
The annual data has a “base effects” skew as a result of the price decline that occurred at the beginning of the pandemic.
On a monthly basis, prices rose 0.8%, quickening from last month’s 0.6% increase.
Analysts surveyed by Refinitiv had expected prices to increase 6.3% from a year ago and 0.6% month over month.
Almost 60% of the increase was due to the 1.5% increase in prices for final demand goods. Prices for final demand services rose 0.6%.
Prices for nonferrous metals spiked 6.9% in May while beef and veal; diesel fuel; gasoline; hay, hayseeds, and oilseeds; and motor vehicles also saw increases. Prices for fresh fruit and melons fell 1.9% primary basic organic chemicals and for asphalt also declined.
Core prices, which exclude food and energy rose 0.7% month over month and 4.8% annually. Economists had expected increases of 0.5% and 4.8%, respectively.
The recent rise in prices has some investors questioning whether the Federal Reserve will need to alter its policy path. The central bank slashed interest rates to near zero and announced unlimited asset purchases in order to combat the economic slowdown caused by lockdowns aimed at slowing the spread of COVID-19.
