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US producer prices up 1.4% in May US producer prices up 1.4% in May
(30 minutes later)
US producer prices jumped by more than expected in May amid soaring fuel and food prices which are threatening to accelerate the pace of inflation.US producer prices jumped by more than expected in May amid soaring fuel and food prices which are threatening to accelerate the pace of inflation.
Prices climbed by 1.4%, marking the biggest gain since November 2007, according to statistics from the US Labour Department. Prices climbed by 1.4%, marking the biggest gain since November 2007, according to statistics from the US Labor Department.
Analysts had forecast a rise in producer prices of about 1%.Analysts had forecast a rise in producer prices of about 1%.
Core producer prices - excluding fuel and food - increased by 0.2%, in line with analysts' forecasts.Core producer prices - excluding fuel and food - increased by 0.2%, in line with analysts' forecasts.
The figures show producers are now paying 7.2% more than they were in May 2007. Cost worries
It is the eighth consecutive month prices rose more than 6% on a yearly basis. Some analysts were upbeat about the figures, pointing out the core producer price had been expected.
"PPI was as expected. Headline numbers are heavy, but that's just oil. Core numbers are staying fairly well controlled," said Jim Paulsen, chief investment officer at Wells Capital.
"I think we have a little bit of inflation but certainly not runaway inflation. The inflation story would fade quickly if oil pulls back below $120," he said.
The data showed that producer prices were now 7.2% higher than they were a year ago. This was the eighth consecutive month that prices had risen by more than 6% on an annual basis.
The new figures add to worries that producers will soon be forced to raise prices to limit the impact of spiralling fuel and food prices.The new figures add to worries that producers will soon be forced to raise prices to limit the impact of spiralling fuel and food prices.
Analysts said that firms could only pass on so much to the consumer before having a negative impact on company profits.Analysts said that firms could only pass on so much to the consumer before having a negative impact on company profits.
"You will see companies trying to [increase prices] in the coming months. If they are unsuccessful, they will probably have to eat the higher costs," said Keith Hembre, chief economist at FAF Advisers.