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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%.

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