US producer prices rose at a double-digit 12-month rate for a sixth consecutive month in May, data out Tuesday showed.
The 10.8% YoY rise notched in May counted among the largest on record, even as it represented a slight reprieve from April’s downwardly-revised pace and March’s 11.5% scorcher.
Consensus expected 10.9% from the headline final demand index. Obviously, the conjuncture shown in the figure (below) has no modern precedent.
Ex-food and energy, PPI rose 8.3% YoY, meaningfully lower than the 8.6% consensus expected, with the caveat that “meaningfully” is a misnomer under the circumstances.
Stripping out food, energy and trade, the 12-month gain was 6.8%, unchanged from April’s annual pace.
The MoM prints weren’t particularly encouraging, even as they could’ve been worse. The headline gauge rose 0.8% from April, matching estimates (figure below). Ex-food, energy and trade services, the monthly advance was 0.5%, hotter than April’s increase, but slightly cooler than expected.
Downward revisions were welcome, but generally speaking, it’d be a stretch to use the word “progress.”
Notably, prices for final demand food were flat MoM. The unchanged monthly print came after a string of hot readings, including a 2.4% MoM increase in March, following Russia’s invasion of Ukraine.
The 1.4% monthly increase in the goods gauge was the fifth consecutive, and was largely attributable to another big jump in the energy component. The gasoline index rose 8.4%. Prices for jet fuel, residential natural gas, diesel fuel and, of course, “processed young chickens,” all rose. (Fortunately for the piccata lovers, veal prices fell.)
In services, freight costs accounted for a third of the index’s monthly advance, which more than reversed April’s decrease.
You’d be reaching to interpret the report as a reprieve despite the marginal undershoots to consensus on the 12-month aggregates. Even the revisions were amenable to pessimistic spin: April’s red-hot PPI report presaged May’s CPI game changer, so if factory-gate inflation was actually cooler than originally reported, it didn’t do much, if anything, to ameliorate the pain for beleaguered American consumers.