WASHINGTON – Wholesale prices paid to U.S. factories and farmers rose in May for the fifth consecutive month, resuming their rise after an April pause, the U.S. Department of Labor’s Bureau of Labor Statistics said today.
The Producer Price Index for Finished Goods rose a seasonally adjusted 1.4 percent compared with the month before, after rising 0.2 percent in April and 1.1 percent in March, the BLS said. The May increase was 40 percent greater than the 1-percent gain predicted by a Bloomberg News survey of 73 economists. (Their forecasts called for gains of 0.6 percent to 1.6 percent.)
Among PPI components, the index for finished foods rose 0.8 percent in May, after holding steady in April and rising 1.2 percent in March. Faster increases in prices for meats, cheeses and chips were partly offset by lower prices for melons and milk.
The wholesale price of finished energy goods fell 0.2 percent, after falling 0.2 percent in April and rising 2.9 percent in March. Gasoline prices rose 9.3 percent after seasonal adjustment, erasing April’s 4.6-percent decline. The diesel fuel index also rose after falling in April, while home heating oil, liquefied petroleum gas (LPG) and kerosene all accelerated from their April gains. But price increases slowed last month for residential electricity power – up 0.6 percent in May, or half its April rate – and natural gas service.
Meanwhile, the core PPI excluding food and energy goods edged up 0.2 percent in May – matching the survey’s prediction – after rising 0.4 percent in April and 0.2 percent in March. Higher prices for tobacco products, aircraft, plastic products and communication and related equipment were partly offset by declines on passenger cars, non-wood furniture, periodicals and bottled liquors, the BLS said.
Compared with May 2007, the PPI rose 7.2 percent to 179.6 points (1982 = 100 points) after posting a year-over-year gain of 6.5 percent the month before. Finished energy goods rose 19.7 percent year-over-year, while finished consumer foods climbed 6.5 percent. The core index excluding food and energy goods rose 3.0 percent year-over-year, the same as in April.
“It’s going to further compress companies’ profits,” Russell Price, senior economist at H&R Block Financial Advisors in Detroit, told Bloomberg News. “We do have further inflationary pressures ahead as some energy prices will filter through.”
Energy and food prices have continued to rise in June, with gasoline prices nationwide reaching a record $4.08 per gallon yesterday in AAA’s weekly fuel-price survey. Prices have now broken $4 per gallon in 21 states, including Rhode Island and Massachusetts, the auto club said. (READ MORE)
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Additional information, including the 21-page Producer Price Index – May 2008 report, is available from the U.S. Department of Labor’s Bureau of Labor Statistics at www.bls.gov/ppi.
