Prices charged by producers for goods and services rose 5.3 percent in the 12 months leading into May, according to data released Tuesday by the Labor Department.
The Producer Price Index (PPI) for final demand — not parts or components — rose at the fattest unadjusted annual rate since the Labor Department began calculating yearly data in 2010.
The record-breaking annual jump in the PPI also reflects a sharp rebound from a steep decline in prices last year. Since prices fell drastically during the onset of the pandemic, the subsequent recovery has also appeared sharp.
“The ongoing mismatch between supply and demand continues to fuel price pressures, while the influence of base effects after last spring’s collapse in prices likely peaked last month,” wrote Mahir Rasheed and Gregory Daco of Oxford Economics in a Tuesday analysis.
Even so, most economists expect the rate of price increases to settle down as the economy hits a more sustainable pace.
“Looking past the noise, producer price increases will slow as supply constraints relax and recalibrate to demand in the second half of 2021,” Rasheed and Daco wrote. “With inflation expectations cooling and fiscal stimulus fading, we continue to share the Fed’s view that we are not entering an environment of spiraling prices.”