Finished Goods Prices Rose 0.3% in May; Short-Term Effect On Inflation Seen
A surge in producer prices that began late last year with steel and paper has shown up in the prices of finished goods, the government reported yesterday.</br></br>The Labor Department found that prices for its "core" set of finished goods rose 0.3 percent in May for the second month running -- a pace that if continued through the year would suggest an inflation rate of nearly 4 percent.</br></br>But the same report showed prices for the key materials used by manufacturers already had begun to moderate or decline, suggesting to most analysts the inflation threat was temporary.</br></br>"What this looks like is the end of a small inflation spike in reaction to an earlier buildup in the price of crude and intermediate materials," said Joel Popkin, a Washington economist and inflation expert.</br></br>Although this spike in producer prices in May could translate into a spike in retail prices later this summer, Popkin said he expects consumer prices will end the year 3 percent above where they began, with no signs of an acceleration in the inflation rate.