US May PPI: Inflationary pressures slowly building - Wells Fargo

According to analysts from Wells Fargo, the rise in the Producer Price Index (PPI) index in May was lead by higher energy prices.

Key Quotes:

“Beating expectations, PPI for final demand increased for the second straight month in May, up 0.4 percent, on higher goods and services prices. Final demand goods prices climbed 0.7 percent, with two-thirds of the increase tied to energy prices. Final demand services prices advanced 0.2 percent on the month, largely due to a 1.2 percent gain in margins of trade services, specifically machinery & equipment wholesaling.”

“On net, improvement in PPI inflation, as well as import prices, is consistent with the waning impact of the dollar appreciation and rising commodity prices. This development should bolster policy makers’ confidence that inflationary pressures are slowly building, supporting an eventual Fed rate hike.”