The Labor Department said the Producer Price Index rose 6.5% in May from a year earlier, the largest increase since November 2022.
On a monthly basis, the PPI rose 1.1% from April, faster than the 0.6% increase forecast by economists polled by FactSet, and the reading followed a Consumer Price Index report that surged in May to an annual rate of 4.2%.
The report said the increase came amid higher energy prices stemming from the Iran war; wholesale gasoline prices surged by more than 23% from April to May and by nearly 70% from the year-ago period.
Excluding volatile food and energy prices, so-called core wholesale prices rose 0.4% in May from the previous month and 4.9% from May 2025.
The Fed is widely expected to hold interest rates steady at its next meeting, scheduled for June 16-17. Elizabeth Renter, senior economist at NerdWallet, said, "When determining the direction of monetary policy, the Fed looks to today's wholesale inflation figures as one piece in the larger puzzle. The likelihood of a rate hike in the coming months has increased with this week's consumer and wholesale inflation data, but the Fed will most likely wait another month before taking that step."
"With both the May CPI and PPI data in hand, our PCE tracking nowcast points to a 0.5% rise in headline prices, and a 0.3% rise in core prices in May," Oxford Economics U.S. economist Grace Zwemmer said in a research note. "This would still push headline PCE up to 4.2%, its hottest reading since April 2023."