Producer Prices Rise 6.5% in May on Higher Energy Costs

The US producer price index jumped 6.5% in May from a year earlier, driven by a surge in energy costs, with wholesale gasoline prices rising more than 23% month to month and nearly 70% year over year. The increase is the largest yearly jump since November 2022, and it adds pressure on the Federal Reserve to curb inflation. The surge in energy prices is attributed to the Iran war disruptions, which have caused a significant disruption in oil supplies. Excluding volatile food and energy prices, core wholesale prices rose 0.4% from April and 4.9% from May 2025. The Federal Reserve is expected to hold rates steady next week, but may raise them later this year to curb inflation, which is running well ahead of the central bank’s 2% target. The data also shows that consumer prices rose 4.2% in May from a year earlier, with gasoline prices up nearly 41% from May 2025 and airfares up almost 27%. The US crude oil inventories are drying up as the summer driving season approaches, with S&P Global Energy warning that continued disruption to Middle East flows could lead to sustained drops in inventories, which would likely signal entry into a ‘danger zone’ for the US refining system.