Wholesale price report shows inflation in check

May increase is less than economists expect, and annual rate of decline is sharpest since 1949.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Julianne Pepitone, CNNMoney.com contributing writer

How stimulus will help your state
The Obama administration says the Recovery Act created or saved 640,000 jobs through September. Here's a state-by-state breakdown.
When will the government come up with a plan to reform health care?
  • By the end of the year
  • By the end of Obama's term
  • It won't happen

NEW YORK (CNNMoney.com) -- Wholesale prices jumped slightly in May, the government said Tuesday, but the increase was less than expected and the 5% annual rate of decline was the sharpest since 1949.

The Producer Price Index, which tracks the changes in selling prices for domestic producers, rose by 0.2% last month. The report is widely watched to monitor inflation.

A consensus estimate of economists surveyed by Briefing.com had forecast a 0.6% increase.

The jump in wholesale prices follows a 0.3% increase in the index in April. January's 0.8% increase snapped a five-month streak of falling prices.

"There's no story on inflation here, and deflation doesn't seem to be a concern," said Anika Khan, economist at Wachovia.

Inflation and deflation: Year-over-year, wholesale prices fell 5%, the largest decline in 60 years.

"That continues to show that even further back in the pipeline we don't have inflation risk," Khan said.

Inflationary concerns rise in tandem with large increases in the so-called "core PPI," which excludes volatile energy and food costs, Khan said. In May, the core PPI edged up by only 0.1%, matching forecasts.

Conversely, deflation is characterized by "broad-based, continued declines in subsectors, which we haven't seen," Khan said.

A 2.9% increase in energy goods prices offset a 1.6% decline in consumer foods, the report said. That's due in large part to gasoline prices, which rose 13.9% following a 2.6% increase in April.

Prices at the pump have increased for 49 straight days, according to a separate survey for motorist group AAA.

Outlook: In the short term, neither inflation nor deflation should occur, Khan said.

"But eventually, we should be taking a watchful eye to the core numbers," she said. "With all of the stimulus spending, inflation should be a problem in the long term." To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.