PPI Up on Energy

Washington, DC, June 14, 2007--Higher energy costs boosted producer prices 0.9 percent in May, but excluding volatile food and energy costs, prices paid at the factory gate were up a more moderate 0.2 percent, the Labor Department reported on Thursday.

Separate data out on Thursday showed no change in the number of workers signing up for first-time jobless benefits last week, underscoring stability in the labor market.

Economists polled ahead of the data were expecting producer prices -- the prices paid by manufacturers and wholesalers -- to rise 0.6 percent and by 0.2 percent when energy and food were stripped out.

Overall producer prices, which are a measure of prices before they reach the consumer, rose 4.1 percent from a year ago, the biggest year-over-year increase since June 2006. However, core producer prices were up just 1.6 percent from a year ago, and that moderate gain will likely add some relief to Federal Reserve policy-makers as they balance the risks of inflation against economic growth.

Energy prices were up 4.1 percent in May, the biggest monthly rise in six months. That monthly gain was partly due to a 10.2 percent rise in gasoline prices, also the biggest monthly increase since last November.