WASHINGTON, June 14 (Xinhua) -- The U.S. Labor Department reported on Tuesday that producer prices surged 10.8 percent year on year in May, the latest sign of mounting inflation pressure, which could prompt the Federal Reserve to raise rates more aggressively.
The producer price index (PPI) for final demand in May rose 0.8 percent, following advances of 0.4 percent in April and 1.6 percent in March, according to the department's Bureau of Labor Statistics.
Excluding the volatile food, energy and trade services components, the index rose 0.5 percent in May from the previous month, and the figure soared 6.8 percent over the 12 months ending in May.
The surge in producer prices came after the department reported last week that the consumer price index (CPI) skyrocketed 8.6 percent in May from a year earlier, marking the third straight month of inflation over 8 percent and hitting a new 40-year high.
The median one-year-ahead inflation expectation, meanwhile, increased to 6.6 percent in May, up from 6.3 percent in April, according to a survey released Monday by the Federal Reserve Bank of New York, one of the 12 regional reserve banks of the Federal Reserve system.
Household spending expectations over the next year rose by 1.0 percentage point to reach 9.0 percent, a new series high, the New York Fed survey showed.
The string of inflation reports in recent days indicated that inflation showed no sign of easing, which is likely to prompt the central bank to consider a more aggressive rate hike at its meeting this week.
This could mark a major shift from Fed Chair Jerome Powell and other officials' earlier remarks that 50-basis-point interest rate increases should be "on the table" at the next couple of meetings. Fed officials began their pre-meeting quiet period on June 4.
According to the Chicago Mercantile Exchange Group's FedWatch tool, the probability of a 75-basis-point rate hike at the Fed's meeting this week was 96 percent on Tuesday, compared with roughly 13.6 percent a month ago.