U.S. producer prices rise modestly in May

U.S. producer prices came in widely as anticipated in the month of May. Sequentially, the producer price index rose 0.1 percent, whereas it was up 1.8 percent on a year-on-year basis. In the prior month, the PPI had risen 0.2 percent sequentially and 2.2 percent year-on-year.

Stripping food and energy, the core PPI rate rose 0.2 percent sequentially and 2.3 percent year-on-year, while the version of core PPI that also strips the highly volatile trade margins accelerated to 0.4 percent sequentially. The details of the report continued to show a divide between the goods and services components. Goods pipeline inflation continued to be soft throughout the board, while services inflation held up well.

Personal consumption PPI, which broadly tracks the trend in the annual CPI measure, increased 0.2 percent sequentially in May. The core version of personal consumption PPI that excludes food and energy also rose at a strong rate of 0.2 percent sequentially and 2.3 percent year-on-year.

Meanwhile, services inflation also came in strong throughout the board in May, while goods price pressures continued to be soft.

“These readings are broadly in line with our expectations for tomorrow's CPI May data, in which we expect headline CPI at 0.1 percent m/m (1.8 percent y/y) and core CPI to increase 0.2 percent m/m (2.3 percent y/y)”, said Barclays in a research report.

At 14:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 24.7832. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex