US producer prices rise at largest rate in May since 2010

By Ovunc Kutlu

ANKARA (AA) - US producer prices beat expectations by increasing on a monthly and annual basis in May, according to the Labor Department on Tuesday.

The Producer Price Index (PPI), which measures the change in the price of goods sold by manufacturers, rose 0.8%. Analysts expected a 0.6% increase -- the same as in April.

Annually, it soared 6.6% from the same month last year, again, higher than the estimate of 6.3%.

The annual rise was "the largest increase since 12-month data were first calculated in November 2010," the agency said in a statement.

The Federal Reserve closely watches the index since it is a leading indicator of consumer price inflation, which accounts for the majority of overall inflation.

The Consumer Price Index (CPI) rose 0.6% in May from the same month a year ago and soared 5% last month from May 2020.

The 5% annual increase was the largest increase since August 2008.

The Fed's two-day meeting starts later Tuesday and will conclude Wednesday, after which the central bank will release projections for economic growth, inflation, unemployment and it may signal when it could raise interest rates.

Although Fed Chair Jerome Powell has repeatedly said the bank will allow inflation to climb above the target of 2% for some time until full economic recovery is reached, his remarks will be watched closely to see whether a rate hike may come before 2023.