US producer prices climbed last month at the fastest pace since November 2022, fueled by a surge in energy prices after the start of the Iran war. The Labor Department reported Thursday that its producer price index—which captures inflation before it reaches consumers—jumped 6.5% from May 2025. It rose 1.1% from April, as it did the previous month in the fastest rate of increase since March 2022, reports CNN. Wholesale gasoline prices surged by more than 23% from April to May, and nearly 70% from a year earlier, the AP reports.
Excluding volatile food and energy prices, so-called core wholesale prices rose 0.4% from April and 4.9% from May 2025. The wholesale inflation numbers came out a day after the Labor Department reported that consumer prices rose 4.2% in May from a year earlier, the most in three years. Gasoline prices were up nearly 41% from May 2025. Airfares were up almost 27%.
- Gasoline prices have been falling in recent days, but the cost of a gallon of regular gasoline has been above $4 since March, according to motor club AAA. And the US driving season, which pushes prices higher each year, has just begun.
- Inflation is running well ahead of the Federal Reserve's 2% target. The central bank is expected to leave its benchmark interest rate unchanged at its meeting next week. But financial markets expect the Fed could raise rates by the end of the year in an effort to curb price increases.
- Wholesale prices can offer an early look at where consumer inflation might be headed. Economists also watch it because some of its components, notably health care and financial services, flow into the Fed's preferred inflation gauge—the personal consumption expenditures, or PCE, index.
- Stephen Brown, chief North America economist at Capital Economics, wrote that the producer prices "that feed into the PCE price calculation rose by much more than we expected ... It supports our view that the Fed will hike interest rates toward the end of the year.''
Inflationary pressures, intensified by the energy shock caused by the Iran war, are frustrating Americans five months before midterm elections that will determine whether President Trump's Republicans keep full control of Congress, the AP reports. Elizabeth Renter, senior economist at NerdWallet, tells CNN that while businesses can act as a "buffer," absorbing some wholesale price increases they feel could be too much for customers to swallow, "the latest figures portend some inflationary pressures will continue to weigh on households in the months ahead."
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