US PPI increases 0.8% in May

Growth in the US producer price index increased as expected in May, according to figures released on Tuesday by the Bureau of Labor Statistics.

The producer price index for final demand rose 0.8%, in line with analysts' expectations, up from 0.4% in April but down 1.6% in March. On the year, PPI rose 10.8% in May, versus 11% the month before.

In May, nearly two-thirds of the rise in the index for final demand was due to a 1.4% advance in prices for final demand goods, while the index for final demand services increased 0.4%.

Core PPI, which excludes food and energy prices, was up 0.5% on the month compared with an unrevised 0.4% print in April. On the year, core PPI rose 6.8%.

AvaTrade's Naeem Aslam said: "Another pipping hot reading has increased the pressure on the Fed. Traders must embrace for a more hawkish monetary policy and odds are as high as they can be for an interest rate hike of 75 basis in tomorrow's meeting."

Reporting by Iain Gilbert at Sharecast.com