The producer price index climbed a seasonally adjusted 1.1% in May, pushing the 12-month wholesale inflation rate to 6.5%, the Bureau of Labor Statistics reported Thursday.
That annual rate marks the highest wholesale inflation reading since November 2022, matching the pace of increase recorded in April.
Economists surveyed by Dow Jones had forecast a monthly gain of just 0.7%, meaning the actual figure came in significantly ahead of expectations.
Stripping out food and energy, the core PPI rose 0.4% for the month, just below the consensus estimate of 0.5%, suggesting that surging fuel costs are driving most of the inflationary pressure.
Excluding food, energy and trade services, the PPI accelerated 0.8% in May, representing the biggest single-month move in that measure since March 2022.
On a 12-month basis, the core measure excluding trade services rose 5.1%, the highest reading since October 2022, pointing to broadening price pressures across the supply chain.
Nearly 80% of the overall PPI acceleration came from a 2.8% surge in final demand goods prices, which the BLS described as the biggest increase ever recorded in a data series stretching back to December 2009.
Within that goods category, energy accounted for around 80% of the rise, with a 10.7% jump in energy costs driven in large part by a 23.4% wholesale increase in gasoline prices.
On the services side, portfolio management fees contributed meaningfully to the reading, rising 4.8% during what proved to be a strong month for equity markets.
The wholesale inflation data arrives one day after the BLS reported that headline consumer price inflation surged to 4.2% in May, also boosted largely by rising energy prices tied to the Iran war.
Monthly consumer price readings offered a less alarming picture, with core prices rising just 0.2% in May, putting the 12-month core consumer inflation rate at 2.9%.
The combined inflation signals are widely expected to keep the Federal Reserve on hold at its upcoming meeting, with the Federal Open Market Committee set to release its next interest rate decision on Wednesday.
Market pricing currently reflects a near 100% probability that the FOMC will leave rates unchanged at that meeting, according to trader positioning data.
Looking further ahead, traders are pricing in no chance of a rate cut through the remainder of the year, with a better than 60% probability that the next move will actually be a hike, most likely arriving in December.
The European Central Bank moved earlier on Thursday, voting to raise benchmark rates by a quarter percentage point in an effort to counter the inflation surge spreading across major economies.
Few if any Fed officials have signalled an appetite for similar tightening, with most instead advocating patience while monitoring whether the energy supply shock fades and inflation moves back toward the central bank’s 2% target.