The US Labour Department reported on Thursday that its producer price index – which captures inflation before it reaches consumers – jumped 6.5 percent from May 2025. It rose 1.1 percent from April, as it did the previous month.
Wholesale petrol prices surged by more than 23 percent from April to May, and nearly 70 percent from a year earlier.
Inflationary pressures, intensified by the energy shock caused by the Iran war, are frustrating Americans five months before midterm elections that will determine whether US President Donald Trump’s Republicans keep full control of Congress.
Petrol prices have been falling in recent days, but the cost of a gallon of regular petrol has been above US$4 since March, according to motor club AAA. And the US driving season, which pushes prices higher each year, has just begun.
Excluding volatile food and energy prices, so-called core wholesale prices rose 0.4 percent from April and 4.9 percent from May 2025.
The wholesale inflation numbers came out a day after the Labour Department reported that consumer prices rose 4.2 percent in May from a year earlier, most in three years.
Petrol prices were up nearly 41 percent from May 2025. Airfares were up almost 27 percent.
Inflation is running well ahead of the Federal Reserve’s 2 percent target. The central bank is expected to leave its benchmark interest rate unchanged as its meeting next week.
But financial markets expect the Fed could raise rates by the end of the year in an effort to curb price increases.
Wholesale prices can offer an early look at where consumer inflation might be headed. Economists also watch it because some of its components, notably health care and financial services, flow into the Fed’s preferred inflation gauge — the personal consumption expenditures, or PCE, index.
After the United States and Israel attacked February 28, Iran shut the Strait of Hormuz, causing the biggest disruption in oil supplies in history.
Energy prices rocketed. S&P Global Energy warned on Thursday that US crude oil inventories are drying up, just as the summer driving season approaches. (AP)