Business inflation in May surged to its highest level since late 2022, as high fuel prices triggered by the war with Iran ripple across the U.S. economy. <\/p>\n
New data released Thursday showed that from April to May, the producer price index rose 1.1% month over month. <\/p>\n
Even more notably, it rose to 6.5% from the same period a year ago. <\/p>\n
The year-over-year reading was \u201cthe largest 12-month rise since moving up 7.4% in November 2022,\u201d the Bureau of Labor Statistics said in a statement.<\/p>\n
The data comes one day after the consumer price index showed that overall inflation rose in May to its highest level since early 2023.<\/p>\n
Core PPI, which excludes food and energy costs, rose to 4.9% annually. <\/p>\n
The jump in producer prices surprised economists and drew renewed attention to President Donald Trump\u2019s remark Wednesday at the White House where he said, \u201cI love the inflation.\u201d<\/p>\n
\u201cWhen the war is over, it\u2019s coming down, it\u2019s going to come down like a rock,\u201d Trump added. <\/p>\n
The president later claimed that his words had been taken out of context, telling the New York Post, \u201cThe numbers are much lower than anticipated.\u201d<\/p>\n
But neither Wednesday\u2019s consumer price index nor Thursday\u2019s business inflation report was lower than expected. <\/p>\n
The direct line from higher gas prices to higher inflation was stark: BLS said that 80% of the surge in the overall PPI figure Thursday was attributable to surging energy costs.<\/p>\n
Taken together, the PPI and CPI readings reveal an economy under ever more stress from oil prices that remain 40% higher since the United States and Israel launched the Iran war Feb. 28.<\/p>\n
So far this year, oil prices have climbed about 60%.<\/p>\n
E.J. Antoni, Trump\u2019s former nominee to lead BLS, described the business inflation report Thursday as \u201ceye-watering.\u201d<\/p>\n
\u201cThis is getting really ugly,\u201d he wrote on X. <\/p>\n
Thursday\u2019s data is also likely to factor into the decision by the Federal Reserve to keep interest rates on hold for now. <\/p>\n
Still, futures market traders are currently projecting that the central bank will have to hike rates in order to tame inflation by December, with a 60% chance that a hike could happen as soon as October.<\/p>\n
\u201cThe Fed will be hard-pressed to look through the firming in inflation,\u201d said Stephen Juneau, U.S. economist at Bank of America. <\/p>\n
Central banks typically discount or \u201clook through\u201d energy inflation over short periods of time until higher prices spill into other sectors of the economy.<\/p>\n
Also contributing to higher producer prices was a sharp 4.8% rise in portfolio management fees, which also came alongside a seemingly unstoppable rise in stocks. <\/p>\n
Earlier Thursday, another central bank, the European Central Bank, hiked interest rates. ECB President Christine Lagarde said that inflation was not projected to return to 2% until late 2027. <\/p>\n","protected":false},"excerpt":{"rendered":"
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