U.S. wholesale inflation speeds up in May
The numbers: U.S. wholesale prices jumped again in May for the fifth month in a row in a sign that inflationary pressures tied to the reopening of the U.S. economy are likely to persist through the summer.
Yet prices began to surge early in 2021 as more people got vaccinated, coronavirus cases sank, the government dished out another massive dose of stimulus money, and demand for all sorts of goods and services began to outstrip supply.Big picture: The Federal Reserve contends the recent burst of inflation will peter out by next year. Companies will hire more workers, boost production and satisfy the surge in pentup demand after the economy is fully reopen and operating normally, the argument goes.
Wholesale food prices surged 2.6% in May on top of a 2.1% increase in the prior month. Rising prices of corn and other farm goods are expected to raise the cost of groceries in the coming months.The core rate of wholesale inflation, meanwhile, rose 0.7% last month. The core rate is a less volatile measure that strips out food, energy and trade margins. It tends to give a more accurate picture of inflationary trends.
Higher wholesale prices, it should be kept in mind, don’t always translate into higher inflation. Companies raise prices for any number of reasons.
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