WASHINGTON – U.S. producer prices shot up a hefty and more-than-expected 0.8 percent last month, the biggest jump since March 2003, as prices received for food and energy shot up, the Labor Department (search) said on Thursday.
While food and energy prices both rose sharply, the department's core producer price index, a measure of prices paid to farms, factories and refineries with these costs stripped out, gained a larger-than-expected 0.3 percent.
Economists polled by Reuters had expected a 0.6 percent rise in overall producer prices with the core index up 0.2 percent, and the report was likely to fan worry about the potential for a further rise in consumer prices.
Energy prices shot up 1.6 percent in May, while food prices rose 1.5 percent.
Over the last 12 months, overall producer prices have risen 5 percent, their biggest 12-month gain since a 5.7 percent leap in December 1990, when oil prices were spiking in the wake of Iraq's invasion of Kuwait.
The pace of increase in core producer prices has also picked up. Core producer prices (search) are up 1.7 percent over the last 12 months, the biggest rise since the period ending January 2001.
A 1.1 percent gain in the cost of light trucks and SUVs, a rebound from a 1 percent April drop, contributed to the rise in core producer prices last month.
Drugs prices also climbed sharply, gaining 1.8 percent.
Further back in the producer pipeline, cost pressures also appeared to be mounting. Intermediate goods prices rose 1.1 percent last month, while prices at the crude goods level gained 2.8 percent.
However, food and energy costs were largely to blame. Core intermediate goods prices were up a tamer 0.9 percent and core crude prices actually dropped 3.8 percent, a second consecutive sharp monthly slide.