WRAPUP 1-Food, gasoline push up U.S. producer prices
* Producer prices rise 0.5 percent in May
* Energy accounts for over 60 percent of rise in PPI
* Core PPI nudges up 0.1 percent
WASHINGTON, June 14 (Reuters) - U.S. producer prices rose more than expected in May as gasoline and food prices rebounded, but underlying inflation pressures remained muted, which could argue against an early scaling back of monetary stimulus by the Federal Reserve. The Labor Department said on Friday its seasonally adjusted producer price index increased 0.5 percent last month. Wholesale prices had declined 0.7 percent in April. A Reuters survey of economists had forecast prices received percent last month. In the 12 months through May, wholesale prices accelerated 1.7 percent after rising 0.6 percent. "This is not a game changer. I expect that next week the Fed will reaffirm its current policies," said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina. Despite the pick-up last month, underlying price pressures remain muted and modest domestic demand makes it difficult for producers to pass on increased costs to consumers. Wholesale prices excluding volatile food and energy costs ticked up 0.1 percent for a second straight month. In the 12 months through May, the so-called core PPI advanced 1.7 percent after rising by the same margin in April and March. U.S. Treasury debt prices slightly pared gains on the report, while U.S. stock index futures trimmed losses.
Data on retail sales and employment have shown resilience in the economy, despite tighter fiscal policy, which some economists said could move the Fed closer to a decision to trim the $85 billion in bonds it has been buying each month to keep interest rates low and boost the economy. But the low underlying inflation backdrop and weakness in manufacturing make it unlikely the central bank will make any changes at a meeting on Tuesday and Wednesday. Last month, wholesale gasoline prices increased 1.5 percent after dropping 6.0 percent in April. That increase pushed up wholesale energy prices 1.3 percent. Prices had declined 2.5 percent in April. Energy prices accounted for more than 60 percent of the increase in wholesale prices last month. Food prices rose 0.6 percent after a 0.8 percent drop in April. Food prices were pushed up by a record surge in the wholesale price of eggs, which accounted for 60 percent of the rise in the food index. Away from food and gasoline, passenger car prices fell 0.5 percent, while light truck prices increased 0.4 percent. The increase in light trucks accounted for almost two-thirds of the rise in core PPI last month.