Core Producer Prices Cooler Than Expected In April, Headline Highest Since 2022

After yesterday’s mixed bag from consumer prices (headline in-line but core cooler than expected and goods deflating), US Producer Prices were expected to keep accelerating higher (on a YoY basis) in May and they did… by more than expected.

Headline PPI rose 1.1% MoM in May (much hotter than the 0.7% MoM exp) but April’s 1.4% MoM rise was revised down to +1.1% MoM. This left producer prices up 6.5% YoY (vs 6.4% exp and up from revised lower 5.7% in April)…

Source: Bloomberg

…driven by a surge in Services costs…

And, echoing CPI, Core PPI (ex Food and Energy) printed cooler than expected at +0.4% MoM (+0.5% exp) with core PPI up 4.9% YoY (well below the 5.4% YoY exp and flat with April’s revised lower 4.9%)…

Source: Bloomberg

Arguably, the Energy component has peaked here…

And memory prices actually dipped according to PPI data…

The CPI-PPI spread is signaling increased pressure on corporate margins…

Source: Bloomberg

Rate-hike expectations ticked higher on the report (but are stable around one fuill hike in 2026 for now).