BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Thursday, 14 June, 2001, 13:34 GMT 14:34 UK
US wholesale prices edge up
US steel factory
US producer prices rise only moderately in May
The cost of wholesale prices in the US inched up during May, exerting only moderate pressure on inflation.

Producer prices - the price paid by firms to other businesses for raw materials, energy and supplies - rose by only 0.1% in May, slower than April's rise of 0.3%.

I think it basically supports recent comments [from Federal Reserve officials] that inflation doesn't remain a concern

James Glassman
JP Morgan Chase
"I think it basically supports recent comments [from Federal Reserve officials] that inflation doesn't remain a concern," said James Glassman, senior economist at JP Morgan Chase.

Food prices actually fell 0.4% in May after a 0.6% increase in April, while energy prices rose slightly by 0.2%, compared to a gain of 0.1% in April.

The data was collected by the US Department of Labor, which uses its Producer Price index to measure the prices.

Welcomed by the Fed

The moderate increase in prices will be welcomed by the US central bank, the Federal Reserve, which is due to meet later this month to decide on interest rates.

Some analysts are expecting a 0.25% cut to rates at the next meeting, rather than the 0.5% reductions employed by the Fed earlier this year.

The Fed has slashed interest rates five times this year, driving down the key interest rate to 4%, the lowest rate for seven years.

Economists will also be waiting for consumer price figures, which are out on Friday, to give them more of a steer on the economy.

Consumer prices are usually seen as more important than the producer figures.

Core inflation

Stripping out volatile food and energy prices to give a core figure, producer prices rose by 0.2% in May.

This matched a previous gain of 0.2% in April.

The increase in wholesale prices was lower than expected. Wall Street analysts had forecast an average of 0.3% for the headline inflation figure and a 0.1% rise for core producer prices.

On a year-on-year basis, the overall Producer Price index was up 3.8%, while the core rate was up 1.8%.

Jobless claims

In another report, the number of Americans filing new claims for state unemployment benefits fell by a seasonally adjusted 12,000 last week to 428,000.

This constitutes the first decline since the beginning of May.

The dip, which analysts expected, followed a big spike the week before.

Looking at the more stable four-week average of claims, which irons out weekly fluctuations, jobless claims rose to 424,500 last week.

This was the highest level since August 1992, which suggests that companies are continuing to lay off workers.

In a third report, business inventories of unsold goods were flat in April, while sales fell by 0.5%.

Search BBC News Online

Advanced search options
Launch console

Terror's impact

Signs of a slowdown

Rate cuts


Key players

See also:

12 Jun 01 | Business
Worrying times for US homeowners
08 Jun 01 | Americas
Bush tax cuts become law
01 Jun 01 | Business
Mixed picture of US economy
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories