US producer prices register unexpected drop in May

13th Jun 2024 13:34

(Sharecast News) - Wholesale inflation in the US dipped somewhat unexpectedly last month.

According to the Department of Labor, so-called final demand prices fell at a month-on-month pace of 0.2% in May (consensus: 0.1%).

Goods prices accounted for all of the decline, dropping by 0.8% as energy costs fell back by 4.8% versus April. Food prices on the other hand only dipped by 0.1%.

Services prices meanwhile were flat over the month. Those for transportation and warehousing were off by 1.4% and trade prices, which include retailers' margins, were up by 0.2%.

In terms of annual rates of change, the producer price index slowed from a 2.3% clip in April to 2.2% (consensus: 2.5%) for May.

Core producer prices meanwhile were flat over the month (consensus: 0.3%).

"With the May producer price data also coming in weaker than expected, we now estimate that the core PCE deflator increased by only 0.11% m/m last month, which would take the annual core PCE inflation rate down to 2.6% (2.57% to 2 dp) from 2.8% (2.75%)," said Paul Ashworth, chief North America economist at Capital Economics.

"The 0.2% m/m decline in final demand producer prices was principally due to a 7.1% m/m drop back in gasoline prices but, even excluding food and energy, core producer prices were unchanged."

--- More to follow ---