Washington DC [US], June 11, (ANI): US wholesale inflation as measured by the Producer Price Index (PPI) accelerated in May on the back of an oil shock that is rippling through the economy.

The PPI inflation rose 1.1 per cent in May on a monthly basis while climbing 6.5 per cent annually, marking the highest rise since November 2022.

The index for final demand less foods, energy and trade services rose 0.8 per cent in May, the largest advance since increasing 0.9 per cent in March 2022. The same was 5.1 per cent annually, the largest 12-month rise since jumping 5.5 per cent in October 2022.

'Over half of the May advance in prices for final demand goods is attributable to a 23.4 per cent increase in the index for gasoline,' the release from the Bureau of Labour Statistics said.

The rise in wholesale prices reflects the price pressures exerted by a hot energy market owing to a prolonged closure of the Strait of Hormuz. The West Asia conflict continues to rage with fresh bouts of hostility between the US and Iran and a durable truce is unlikely.

The wholesale inflation print comes a day after the BLS released the consumer price index, which rose to 4.2 per cent in May, driven by high gasoline prices.

Higher inflation print for the month of May could be the biggest test for newly-appointed US Federal Reserve chairman Kevin Warsh, who will chair the FOMC meeting on June 16-17. Experts are betting that the FOMC will largely hold the rates.

The European Central Bank (ECB) became the first major central bank to respond to inflation pressure from the Iran war by hiking key interest rates by 25 basis points.

The central bank also raised the inflation forecast for 2026 and 2027 while slashing the growth outlook, attributing it to the impact of war on the commodities market, real incomes and confidence.

Responding to the rise in consumer inflation, US President Donald Trump said that he 'loves inflation' and that prices have been driven up by the Iran war and will come down 'like a rock' as soon as the war ends. (ANI)