US wholesale inflation rose sharply last month as Iran oil shock continues to drive up business costs
US businesses’ input costs are rising rapidly as the Iran war’s oil shock continues to ripple through the economy.
The Producer Price Index, a closely watched gauge of wholesale inflation, rose 1.1% in May, lifting the annual rate to 6.5%, its highest in more than three years, a new Bureau of Labor Statistics report showed Thursday.
A war-driven spike in oil prices was largely responsible for the increase in May’s PPI, BLS data showed.
Wholesale inflation is running at the second-fastest pace on record: The 1.1% increase in monthly inflation, which matched the rate of increase seen in April, is the fastest since March 2022. The annual rate is the highest since November 2022.
PPI serves as a potential bellwether for what consumers could experience in the months to come, though the higher prices businesses pay each other aren’t always fully passed through the supply chain.
Economists were expecting PPI to rise 0.6% from April and the annual rate to reach 6.4%.
Excluding food and energy prices, a core measurement of PPI rose 0.4% from April, holding at 4.9% annually.
Consumers are already feeling the pinch from higher cost of gas: In May, elevated prices at the pump helped push overall inflation to a three-year high of 4.2%, according to the latest Consumer Price Index, released Wednesday.
This story is developing and will be updated.
