US PPI Inflation Report - May 2026
Key Highlights
- Producer Price Index (PPI) inflation surged to 6%, the highest level since December 2022.
- All measures of inflation exceeded market expectations significantly.
- The EUR/USD currency pair showed a muted reaction to the news.
- Market expectations for a Federal Open Market Committee (FOMC) rate hike by the end of the year are now approximately 40% priced in.
Detailed Inflation Data
The April PPI reading indicated a sharp increase in producer prices, primarily driven by rising petrol prices. The core PPI, which excludes food and energy, also saw a notable rise, reaching 5.2% year-over-year.
Inflation Metrics
| Measure | Year-over-Year (YoY) | Month-over-Month (MoM) |
|---|---|---|
| PPI Inflation | 6.0% (vs. 4.8% consensus) | 1.4% (vs. 0.5% consensus) |
| Core PPI Inflation | 5.2% (vs. 4.3% consensus) | 1.0% (vs. 0.3% consensus) |
| Super-Core PPI Inflation | 5.2% (vs. 4.3% consensus) | 1.0% (vs. 0.3% consensus) |
Notably, airfares increased by 3% month-over-month, while some categories like hospital care and portfolio management showed minimal or negative changes.
Market Reactions
The EUR/USD currency pair remained relatively stable, showing a slight decline of 0.3% on the day, likely due to a lack of positive developments in the Middle East. Additionally, S&P 500 futures exhibited only minor fluctuations.
Following the inflation report, there was a slight increase in market expectations for FOMC interest rate hikes, although such a move is not yet the base scenario. US 10-year bond yields rose to 4.48%, a level not seen since July.