U.S. Fuel And Trucking Costs Power Producer Inflation

• U.S. producer prices increased solidly in May as the cost of gasoline surged, another sign of stubbornly high inflation that could force the Federal Reserve to raise interest rates as much as 75 basis points on June 15. This follows news last week that consumer prices accelerated in May (8.6%), culminating in the largest year-on-year increase since 1981. 
• The producer price index for final demand rose 0.8% last month after advancing 0.4% in April. A 1.4% jump in the prices of goods accounted for nearly two-thirds of the rise in the PPI. 
• Goods prices, which rose 1.3% in April, were driven by soaring costs for energy products. Wholesale gasoline prices rebounded 8.4% after falling 3.0% in April, making up 40% of the rise in the costs of goods. Jet fuel increased 12% after shooting up 14.8% in April. There were also increases in the cost of residential natural gas, steel mill products and diesel fuel. 
• As producer price increases continue to shoot higher, this could mean even more pipeline pressures for the consumer in the months to come.

(Source: Reuters)