Core PPI Rises

From Reuters:

Producer prices up more than expected

U.S. producer prices excluding energy and food rose faster than expected last month and high gasoline prices boosted otherwise tepid retail sales, the government said on Tuesday in reports that signal inflationary pressures.

U.S. producer prices rose just 0.2 percent last month as food costs fell, but prices outside of food and energy rose a steeper-than-expected 0.3 percent. Retail sales in May rose just 0.1 percent, matching Wall Street expectations, with declines in auto, furniture and building material sales.

Analysts said the rise in core producer prices shows the risk that rising prices may be working their way from producers to consumers.

"Pipeline inflation pressures continue to build, and that impression was not dispelled by today's release," said William O'Donnell, head of U.S. interest rate strategy and research at UBS in Stamford, Connecticut.
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The producer price report "supports the idea that (the Federal Reserve) will raise rates another 25 basis points on June 29, and the dollar has reacted positively to that," said Alex Beuzelin, foreign exchange market analyst at Ruesch International in Washington.

The consumer price report for May will be released on Wednesday, providing a much broader outlook on inflationary pressures. Analysts expect the 0.4 percent rise in the CPI, while the core rate is expected to rise on 0.2 percent.