Wholesale prices rose more than expected in May as gasoline prices rebounded, but underlying inflation pressures remained tame, the government reported Friday. The Labor Department said its producer price index (PPI), which measures price changes before they reach the consumer, rose 0.5 percent last month, nearly offsetting a 0.7 percent decline in April. Economists had expected prices received by farms, factories, and refineries to rise 0.1 percent in May. In the 12 months ending in May, wholesale prices rose 1.7 percent, following a 0.6 percent 12-month rise the previous month. Despite the acceleration last month, underlying price pressures remain mild, and modest domestic demand makes it difficult for producers to pass on increased costs to consumers. In May, wholesale gasoline prices jumped 1.5 percent, and food costs increased 0.6 percent. But core PPI, which excludes volatile energy and food costs, rose only 0.1 percent last month. Core prices are up 1.7 percent over the past 12 months, well below the Federal Reserve's 2 percent inflation target. Aside from sharp swings in gasoline prices, consumer and wholesale inflation have increased very slowly in the past year.
