Producer Prices: Re-acceleration in May

Bottom Line: Goods price inflation drove a surprise uptick in producer prices in May as steel mill products jumped (likely tariff related) with energy prices rising again. Prices at the final demand services level rose for the 5th straight month as margins for final demand trade services expanded 0.9%. The trucker shortage also helped push up final demand transport and warehouse services by 0.7% on the month -- excluding that sector final demand services was flat. Overall, producer prices are starting to re-accelerate just modestly with some signs that mid-level producers are able to push through price increases to customers. The PPI ROSE by 0.5% in May, compared with market expectations for an increase of 0.3%. Overall producer prices are 3.1% ABOVE the year ago level. The Goods PPI ROSE by 1.0% in May and is now 4.3% ABOVE its year ago level. Food prices rose by 0.1% and are now 0.5% ABOVE their year ago level. Meanwhile energy prices rose by 4.6%. and are now 16.0% ABOVE their year ago level. The Goods PPI less food and energy ROSE by 0.3%, and is now 2.5% ABOVE its year ago level. The Services PPI ROSE by 0.3% in May and is now 2.4% ABOVE its year ago level. The Core PPI ROSE by 0.3%, compared with market expectations for a increase of 0.2%. Core producer prices are now 2.4% ABOVE their year ago level.