NEW YORK (CNNMoney.com) - The latest government reading on wholesale prices showed inflationary pressures mixed compared to Wall Street expectations.

The Producer Price Index, a measure of prices paid by businesses at the wholesale level, rose 0.2 in May after jumping 0.9 percent in April due to higher energy prices that month, the Labor Department said. Economists surveyed by Briefing.com had forecast a 0.4 percent rise for May.

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But the so-called core PPI, which strips out often volatile food and energy prices, rose 0.3 percent following a 0.1 percent gain in April. Economists had forecast only a 0.2 percent gain for the more closely watched core reading.

Investors and economists have been scouring every inflation reading recently since the Federal Reserve has signaled that its decision on future rate hikes would be based on the latest economic numbers.

"Basically what the report says is there's inflation out there and this is another green light that we're going to see a hike at the June 29 meeting," said Jason Schenker, an economist at Wachovia. "It's a further justification for the Fed governors and presidents who have been wringing their hands about inflation."

Tuesday's report comes the day before the more closely watched Consumer Price Index, the government's main inflation gauge of retail prices.

Economists are forecasting a 0.4 percent gain for CPI after April's 0.6 percent increase, while the core CPI is expected to be up 0.2 percent after a 0.3 percent gain the prior month.

Energy prices rose 0.4 percent in last month, after jumping 4 percent in April, fueling that month's spike in wholesale prices. Food prices fell 0.5 percent, the department said in its report.

While overall wholesale prices gains slowed last month, producer prices have risen 4.5 percent over the last 12 months, up from the 4.0 percent reading in April, the department said.

But the core reading is up just 1.5 percent over the last 12 months, the same as the rate of increase in April and down from the 1.7 percent gains in February and March.

The Fed has a rough target of holding core inflation to an annual rate of increase between 1 and 2 percent. Some inflation measures, such as core CPI, have been coming in just above that range in recent reports.

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