A key inflation gauge released on Tuesday showed that prices for U.S. producers rose by almost 11% last month, compared to May 2021, in another signal that inflation is a top concern in an economy still recovering from the COVID-19 pandemic.
The increase was documented in the Labor Department’s Producer Price Index, which showed that inflation for producers climbed by 10.8% in the 12 months ending in May. While May’s increase was historically high, the year-to-year increases in March (11.5%) and April (10.9%) were greater.
From April to May, the increase for producers was 0.8%.
The Producer Price Index is a gauge that shows inflation at the wholesale level before prices reach consumers on the retail market. The largest driver of inflation over the past year has been the cost of energy — particularly gasoline — in the United States.
“Forty percent of the May increase in prices for final demand goods can be attributed to an 8.4% advance in the index for gasoline,” the Labor Department said in a statement Tuesday.
According to AAA on Tuesday, the national average for gas was about $5.01. Gas prices have been a primary driver of inflation. File Photo by John Angelillo/UPI
“Prices for jet fuel, residential natural gas, steel mill products, diesel fuel, and processed young chickens also moved higher.”
The department noted that beef and veal prices fell 9.5% while the cost of commercial power, iron and steel scrap were also down.
Minus food, energy and trade, the producer index was up 6.8% in May over the same period in 2021. In the services sector, there was a 2.9% increase.
The Producer Price Index is one of two key inflation gauges updated monthly by the Labor Department. The Consumer Price Index, which measures inflation on the retail market, said last Friday that prices were up 8.6% year-to-year in May.
The Labor Department’s report came after severe losses on Wall Street on Monday, when the Dow dropped 876 points and the S&P 500 and Nasdaq declined in trading.
By 10:30 a.m. EDT Tuesday, the Dow was down about 65 points. The S&P 500 was down about 7 points and the Nasdaq composite was off about 20 points.
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