Regional factory surveys have shown an acceleration in raw material prices this year. So far, manufacturers have not passed on these higher costs to consumers. A report on Tuesday showed monthly consumer prices rising moderately in May.
The Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, increased 1.8 percent year-on-year in April after a similar gain in March.
In May, prices for goods surged 1.0 percent, accounting for 60 percent of the rise in the PPI. Goods prices were unchanged in April. In May, they were boosted by a 9.8 percent jump in the price of gasoline. Wholesale gasoline prices slipped 0.4 percent in April.
Prices for steel mill products surged 4.3 percent in May, the largest rise since February 2011, likely reflecting steel import tariffs imposed in March by the Trump administration. The cost of these products could rise further after the government this month widened the duties to steel imports from the European Union, Canada, and Mexico.
Wholesale food prices edged up 0.1 percent last month after declining 1.1 percent in April. Excluding foods and energy, goods prices increased 0.3 percent, rising by the same margin for a third straight month.
The cost of services increased 0.3 percent after nudging up 0.1 percent in April. Services were driven by a 0.9 percent rise in margins for trade services.
The cost of health-care services ticked up 0.1 percent after falling 0.2 percent in April. Those costs feed into the core PCE price index.