US producer prices increased less than expected in May, indicating that inflationary pressures remained subdued for both goods and services, despite ongoing concerns around trade policies and broader economic uncertainty.
The Producer Price Index (PPI) rose 0.1% from the previous month, the Bureau of Labor Statistics reported Thursday. This was slightly below the 0.2% increase forecasted by economists surveyed by Bloomberg. When excluding the more volatile food and energy categories, the core PPI also increased 0.1%.
Prices for goods excluding food and energy advanced 0.2%, while services prices increased 0.1%, reflecting a rebound in wholesaler margins, particularly in vehicle and machinery wholesaling. Food prices edged up 0.1%, while energy prices remained flat.
The report follows a similarly modest reading in May’s Consumer Price Index (CPI), marking the fourth consecutive month of tame inflation. Together, the data suggest that inflation remains under control—at least for now—even as economists anticipate that recent tariff hikes could push prices higher later in the year.
Many economists believe a delayed impact from trade-related costs could emerge as businesses exhaust stockpiles imported before new tariffs were imposed. Once inventories run low, retailers may be forced to pass cost increases on to consumers, potentially driving inflation higher.
According to Erik Christoffersen of AlTi Tiedemann Global, companies remain cautious amid lingering trade uncertainty. The PPI data underscore that wholesaler and retailer margins have fluctuated significantly in recent months, reflecting that uncertainty. Some components of the PPI, including health care and financial services costs—used to estimate the Fed’s preferred Personal Consumption Expenditures (PCE) index—were also soft in May. The PCE report is due later this month.
Analysts are watching closely to see whether the inflation calm continues or gives way to more noticeable price increases, especially in light of President Trump’s latest tariff policies. While the White House recently reached a deal with China to maintain elevated tariffs on many goods, the administration has signaled it may unilaterally impose new duties on other trade partners in the coming weeks.
Despite concerns over potential economic disruptions, recent indicators paint a picture of resilience. Stock markets are nearing record highs, tax receipts have risen, and inflation remains subdued—even as some economists remain cautious about underlying weaknesses in the labor market and bond market signals.
“Tariff-driven price increases may not feed through to the CPI data for a few more months yet, so it is far too premature to assume that the price shock will not materialize,” wrote Seema Shah, chief global strategist at Principal Asset Management.
