Business inflation in May surged to its highest level since late 2022, as high fuel prices triggered by the war with Iran ripple across the U.S. economy. <\/p>\n
New data released Thursday showed that from April to May, the producer price index rose 1.1% month over month. <\/p>\n
Even more notably, it rose to 6.5% from the same period a year ago. <\/p>\n
The year-over-year reading was \u201cthe largest 12-month rise since moving up 7.4% in November 2022,\u201d the Bureau of Labor Statistics said in a statement.<\/p>\n
The data comes one day after the consumer price index showed that overall inflation rose in May to its highest level since early 2023.<\/p>\n
Core PPI, which excludes food and energy costs, rose to 4.9% annually. <\/p>\n
The jump in producer prices surprised economists and drew renewed attention to President Donald Trump\u2019s remark Wednesday at the White House where he said, \u201cI love the inflation.\u201d<\/p>\n
\u201cWhen the war is over, it\u2019s coming down, it\u2019s going to come down like a rock,\u201d Trump added. <\/p>\n
The president later claimed that his words had been taken out of context, telling the New York Post, \u201cThe numbers are much lower than anticipated.\u201d<\/p>\n
But neither Wednesday\u2019s consumer price index nor Thursday\u2019s business inflation report was lower than expected. <\/p>\n
The direct line from higher gas prices to higher inflation was stark: BLS said that 80% of the surge in the overall PPI figure Thursday was attributable to surging energy costs.<\/p>\n
Taken together, the PPI and CPI readings reveal an economy under ever more stress from oil prices that remain 40% higher since the United States and Israel launched the Iran war Feb. 28.<\/p>\n
So far this year, oil prices have climbed about 60%.<\/p>\n
E.J. Antoni, Trump\u2019s former nominee to lead BLS, described the business inflation report Thursday as \u201ceye-watering.\u201d<\/p>\n
\u201cThis is getting really ugly,\u201d he wrote on X. <\/p>\n
Thursday\u2019s data is also likely to factor into the decision by the Federal Reserve to keep interest rates on hold for now. <\/p>\n
Still, futures market traders are currently projecting that the central bank will have to hike rates in order to tame inflation by December, with a 60% chance that a hike could happen as soon as October.<\/p>\n
\u201cThe Fed will be hard-pressed to look through the firming in inflation,\u201d said Stephen Juneau, U.S. economist at Bank of America. <\/p>\n
Central banks typically discount or \u201clook through\u201d energy inflation over short periods of time until higher prices spill into other sectors of the economy.<\/p>\n
Also contributing to higher producer prices was a sharp 4.8% rise in portfolio management fees, which also came alongside a seemingly unstoppable rise in stocks. <\/p>\n
Earlier Thursday, another central bank, the European Central Bank, hiked interest rates. ECB President Christine Lagarde said that inflation was not projected to return to 2% until late 2027. <\/p>","protected":false},"excerpt":{"rendered":"
Business inflation in May surged to its highest level since late 2022, as high fuel prices triggered by the war with Iran ripple across the U.S. economy. New data released Thursday showed that from April to May, the producer price index rose 1.1% month over month. Even more notably, it rose to 6.5% from the <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":["post-37407","post","type-post","status-publish","format-standard","category-business"],"_links":{"self":[{"href":"https:\/\/americanfinancecore.com\/index.php\/wp-json\/wp\/v2\/posts\/37407","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/americanfinancecore.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/americanfinancecore.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/americanfinancecore.com\/index.php\/wp-json\/wp\/v2\/comments?post=37407"}],"version-history":[{"count":0,"href":"https:\/\/americanfinancecore.com\/index.php\/wp-json\/wp\/v2\/posts\/37407\/revisions"}],"wp:attachment":[{"href":"https:\/\/americanfinancecore.com\/index.php\/wp-json\/wp\/v2\/media?parent=37407"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/americanfinancecore.com\/index.php\/wp-json\/wp\/v2\/categories?post=37407"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/americanfinancecore.com\/index.php\/wp-json\/wp\/v2\/tags?post=37407"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}