Producer prices in the U.S. rose by more than anticipated in the month of May, according to a report released by the Labor Department on Friday, with the price growth largely due to a notable rebound by energy prices.
The Labor Department said its producer price index rose by 0.5 percent in May following a 0.7 percent decrease in April. Economists had been expecting producer prices to edge up by 0.2 percent.
With the monthly increase, which came after two consecutive monthly decreases, producer prices increased at an annual rate of 1.7 percent in May compared to the 0.6 percent increase in April.
The bigger than expected monthly increase in producer prices was primarily due to the rebound by energy prices, which surged up by 1.3 percent in May after tumbling by 2.5 percent in April.
A 1.5 percent jump in gasoline prices contributed to the increase in energy prices along with higher prices for residential natural gas and residential electric power.
The report also showed a rebound by food prices, which climbed by 0.6 percent in May following a 0.8 percent decrease in April.
The Labor Department said a 41.6 percent jump in prices for eggs for fresh use accounted for over sixty percent of the increase in food prices.
Excluding the jump in energy prices as well as the increase in food prices, the core producer price index inched up by 0.1 percent for the second straight month, matching economist estimates.
The modest increase in core producer prices was largely due to higher prices for light motor trucks, which rose by 0.4 percent.
Compared to the same month a year ago, the core producer price index rose by 1.7 percent in May, unchanged from the annual rate of growth seen in April.
"The big trend is still that the previous falls in raw material costs are keeping core price pressures subdued," said Paul Dales, Senior U.S. Economist at Capital Economics. "That trend will probably continue for another 6-12 months yet."
Next Tuesday, the Labor Department is scheduled to release a separate report on consumer prices in the month of May.
For comments and feedback: editorial@rttnews.com