The Producer Price Index for final demand surprised to the upside in May, rising 0.8%. While last week’s CPI data already confirmed end-prices are rising at the fastest clip in more than a decade, the PPI showed no let up in sight with intermediate costs continuing to pick up further back in the pipeline.
Staring Down the Pipeline
- Last week’s sizable jump in the Consumer Price Index went down relatively easy with markets and Fed watchers as outsized gains in a few categories such as travel and vehicles drove much of the increase. However, May’s Producer Price Index (PPI) showed input costs continuing to rise at a heady clip, putting upward pressure on costs beyond a few select industries.
- The PPI for final demand rose 0.8% in May, pushing the index up 6.6% over the past 12 months. Higher food and energy costs pushed goods prices up 1.5%, but prices in the larger service sector continued to charge higher as well, up 0.6%.