The Labor Department said on Wednesday its producer price index for final demand rose 0.5 percent last month, boosted by a surge in gasoline prices and continued gains in the cost of services. The PPI edged up 0.1 percent in April.
In the 12 months through May, the PPI increased 3.1 percent, the largest advance since January 2012. Producer prices rose 2.6 percent year-on-year in April. Economists polled by Reuters had forecast the PPI gaining 0.3 percent from the prior month and rising 2.8 percent from a year ago.
A key gauge of underlying producer price pressures that excludes food, energy and trade services nudged up 0.1 percent last month. The so-called core PPI rose by the same margin in April. In the 12 months through May, the core PPI rose 2.6 percent after advancing 2.5 percent in April.
Federal Reserve officials were due to resume their two-day policy meeting and are expected to raise interest rates for a second time this year later on Wednesday, encouraged by steadily rising inflation and a rapidly tightening labor market.
The renewed upward trend in producer prices strengthens expectations that inflation will pick up this year and likely breach the U.S. central bank's 2 percent target.