Producer prices rose more than expected in May, and posted the biggest increase since 2012.
Prices rose 0.5% month-over-month — the highest in five years — and fell 1.1% year-over-year. Prices fell 0.4% in April.
Excluding food and energy, core PPI rose 0.1% and 0.6% respectively.
A 15.6% spike in fuel prices accounted for three-quarters of the increase, according to the release from the Bureau of Labour Statistics.
Economists had forecast that producer prices climbed by 0.4% month-over-month and fell 1.1% year-over-year. Excluding food and energy, core PPI is estimated to have climbed by 0.1% and 0.9%, respectively.
In a note to clients after the report, Barclays economists wrote: “We expect PPI inflation to continue to firm, as we believe the negative contributions from the energy component are largely behind us, and we think that the effects of past dollar appreciation on domestic inflation are beginning to wane and should diminish further in the third and fourth quarters.”