WASHINGTON — Wholesale prices across the United States accelerated at their sharpest rate since November 2022 last month, driven by dramatic increases in energy costs following the outbreak of conflict with Iran.
The Labor Department announced Thursday that its producer price index — a measure that tracks inflation before it impacts consumers — surged 6.5% compared to May 2025. Monthly increases hit 1.1% from April, matching the prior month’s rise. Wholesale gasoline costs exploded by more than 23% between April and May, climbing nearly 70% year-over-year.
Rising costs, amplified by energy market disruptions from the Iran conflict, are creating headaches for Americans just five months ahead of midterm elections that will decide whether President Donald Trump’s Republicans maintain complete congressional control.
While gasoline costs have declined recently, regular unleaded has stayed above $4 per gallon since March, motor club AAA reports. The peak U.S. driving season, which annually drives prices upward, is only beginning.
When removing unpredictable food and energy costs, core wholesale prices increased 0.4% monthly and 4.9% from May 2025.
These wholesale inflation figures followed Wednesday’s Labor Department data showing consumer prices climbed 4.2% annually in May, the steepest three-year increase. Gasoline costs jumped nearly 41% from May 2025, while airline tickets rose almost 27%.
Current inflation rates significantly exceed the Federal Reserve’s 2% goal. The central bank is anticipated to maintain its benchmark interest rate at next week’s meeting. However, financial markets predict the Fed might increase rates before year’s end to combat rising prices.
Wholesale price data can provide early indicators of future consumer inflation trends. Economists monitor it closely because certain components, particularly health care and financial services, influence the Fed’s preferred inflation measurement — the personal consumption expenditures, or PCE, index.
Stephen Brown, chief North America economist at Capital Economics, noted that producer prices “that feed into the PCE price calculation rose by much more than we expected … It supports our view that the Fed will hike interest rates toward the end of the year.”
Following a February 28 attack by the United States and Israel, Iran closed the Strait of Hormuz, creating history’s most significant oil supply disruption. Energy prices skyrocketed. S&P Global Energy cautioned Thursday that U.S. crude oil reserves are depleting as summer driving season approaches.
“The bottom line is that U.S. inventory levels remain above estimated minimum operating thresholds,” said S&P Global Energy’s Aaron Brady. “However, with continued disruption to Middle East flows, draws are likely to extend into the third quarter, even in the event of a near-term diplomatic resolution.” Additional major, sustained inventory drops “would likely signal entry into a ‘danger zone’ for the U.S. refining system.”
