— Chris Rupkey, MUFG
US producer prices held steady last month amid low energy prices. The Labour Department reported on Tuesday that its Producer Price Index came in at 0.0% in May, following the preceding month's climb of 0.5% but meeting analysts' expectations. On an annual basis, the headline PPI rose 2.4%, compared to April's 2.5% jump, which was the largest yearly rise since February 2012. In the meantime, the so-called core PPI climbed 0.3% last month, following April's rise of 0.4%, whereas analysts expected core producer prices to increase 0.2%. Tuesday's data showed that energy prices fell 3.0%, the biggest drop since February 2016, after advancing 0.8% in April. The gasoline price dropped 11.2% last month, the biggest fall since February 2016. On the other side, services prices climbed 0.3% in May, as final demand for trade services surged 1.1% last month. Back in April, services prices advanced 0.4%. Even though price pressures in the United States are weak, the Federal Reserve is widely expected to raise interest rates for the second time this year at the end of its two-day meeting on Wednesday.
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