US producer prices rise 10.8% in May, adding to pressure on Fed

US producer prices surged 10.8 per cent in May from a year earlier, underscoring the ongoing threat to the economy from inflation that shows no sign of slowing.

Thursday's report from the Labor Department showed that the producer price index — which measures inflation before it reaches consumers — rose at slightly slower pace last month than in April, when it jumped 10.9 per cent from a year earlier, and is down from an 11.5 per cent yearly gain in March.

On a monthly basis, producer prices climbed 0.8 per cent in May from April when they increased 0.4 per cent.

The figures indicate that rising prices will continue to erode Americans’ paychecks and play havoc with household budgets in the coming months.

Inflation has created major political headaches for President Joe Biden and congressional Democrats and has forced the Fed into a series of rapid interest rate hikes intended to slow the economy and cool price increases.   

On Friday, the government reported that inflation — as measures by the consumer price index — jumped to a new 40-year high of 8.6 per cent in May, a surprise gain that disappointed expectations that price increases could be slowing. Gas and food costs rose sharply, pushed higher by the Ukraine war, but the costs for rent, new and used cars, medical care, and clothing also rose, evidence that inflation is spreading more broadly.