U.S. Wholesale Prices Rise Sharply in May

producer wholesale prices may inflation economic indicators

WASHINGTON -- A rise in food and gas costs drove a measure of wholesale prices up sharply in May. But outside those volatile categories, inflation was mild.

The Labor Department said Friday that the producer price index rose 0.5 percent in May from April. That nearly offset a 0.7 percent decline in April from March. Gas prices rose 1.5 percent last month, and food costs increased 0.6 percent.

The index, which measures price changes before they reach the consumer, has increased just 1.7 percent in the 12 months ending in May. That's up from a 0.6 percent year-over-year increase in April, the smallest in 10 months.

Core prices, which exclude the food and energy, rose just 0.1 percent in May. They are up 1.7 percent in the past year, below the Federal Reserve's 2 percent inflation target. Mild inflation gives the Fed more latitude to continue with its aggressive policies to spur greater economic growth.

Aside from sharp swings in gas prices, consumer and wholesale inflation has increased very slowly in the past year. The combination of modest economic growth and high unemployment has kept wages from rising quickly. That's made it harder for retailers and other firms to raise prices.

The Fed has said plans to keep the short-term interest rate it controls at a record low near zero until the unemployment rate falls below 6.5 percent, provided inflation remains under control. The unemployment rate ticked up in May to 7.6 percent.

The Fed is also purchasing $85 billion a month in bonds to keep longer-term interest rates down. That's intended to encourage more borrowing and spending, which drives economic growth. The Fed says it will continue to buy bonds until the job market improves substantially.

Employers are adding jobs at a steady pace and consumers are spending more, despite an increase in Social Security taxes at the beginning of the year. That's fueled intense speculation that the Fed may soon start reducing the pace of its monthly bond purchases.

Many economists expect they will do so by the end of the year, particularly if hiring stays healthy. But tame inflation means they face less pressure to taper their purchases. If prices were rising more quickly, the Fed could be forced to end its bond-buying program and raise interest rates.

The Fed's next policymaking meeting will take place next week, June 18-19.

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Garry Carlson

Here comes the hang-over from printing all that money and the bailouts. Real Estate prices rise, so, does the rest of the goods!

June 17 2013 at 10:39 AM Report abuse rate up rate down Reply

More number manipulations!! Fools that some are. This is done without fuel and food spiraling upward??!! These are things that affect most everyone the greatest and they are inclusive. What a sham!

June 17 2013 at 10:18 AM Report abuse rate up rate down Reply
LA is Best

A rise in food and gas costs drove a measure of wholesale prices up sharply in May............,All because of the 0bama regimes policies!!

June 17 2013 at 8:55 AM Report abuse +1 rate up rate down Reply

Nope! No inflation here! just don't drive or eat and you'll be good!

June 17 2013 at 8:35 AM Report abuse +1 rate up rate down Reply

ummm...........Bill, I take it you've never had a retail business? Do you see all of the vacant commercial property? Think about why it's vacant.

June 17 2013 at 8:34 AM Report abuse +1 rate up rate down Reply

There is nothing in this article I believe to be true as everything I buy costs me more everytime I shop for something or pay for a service and if the price hasn't changed the amount of content has decreased. Seems this has been going on since Obama won his first term, they continue to deny there's substancial inflation against the dollar which isn't worth squat anymore and Obama suggests cutting cola for vets and seniors.

June 17 2013 at 6:14 AM Report abuse +1 rate up rate down Reply

Greed Greed Greed! It use to be that retailers stayed within reason when marking their prices to make a profit. Now they jack up everything 4 times (or more) what they paid for it on a regular basis and blame inflation. Greed is the main cause of inflation. What is really sad is that they keep their employees part time at minimum wage so that they can rake in even more profits. The younger generation does not even realize that their wallets are being raped on a regular basis and they tend to accept it. For older folks like me, we see it for what it is.

June 17 2013 at 5:59 AM Report abuse +1 rate up rate down Reply