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First Cut: May Final Demand Producer Prices up on food and energy while trade services declined

The Final Demand Producer Price Index for May was up 0.4% after declining 1.3% in April. Compared to a year ago, the index was down 0.8%. Core PPI – excluding food, energy, and trad services – was up 0.1% in May after declining 0.9% in April and was down 0.4% compared to May 2019.

The increase was due to a 6.0% increase in foods which the BLS said accounted for about 2/3 of the overall increase. It was a 40.4% hike in prices for meat that was behind most – but not all – of the rise in food prices. Energy prices reflected the modest rebound in oil prices and were up 4.5%. Trade services declined 0.8%.

Final demand for goods prices was up 1.6% in May while down 3.3% compared to the same month last year. Final demand for services was down 0.2% in May while up 0.3% compared to May 2019.

Final demand construction prices were down 0.1% in May. Total government purchases were down 0.2%.

Producers are having to deal with high levels of uncertainty in their supply costs as challenges along the supply chain persist. Some commodities are scarce and/or delayed in transport, while services are facing difficulties in operating in the time of COVID-19.

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