US wholesale inflation experienced a slight rise in May, driven by higher costs. The latest Producer Price Index, a key indicator of wholesale inflation, showed a 0.1% increase in prices paid to producers, pushing the annual rate to 2.6%, according to data from the Bureau of Labor Statistics released on Thursday.

Economists had anticipated a 0.2% increase from April and a 2.6% rise for the 12 months ending in May. This uptick marks a reversal from April's 0.2% decline, largely attributed to squeezed margins for wholesalers and retailers, which experts linked to higher tariffs.

Revisions to April's PPI data revealed that margins were not as impacted as initially thought. The reported 1.7% decline in the trade services category was adjusted to a 0.5% drop. In May, trade services saw a 0.4% increase, as per the report.

Inflation related to goods increased by 0.2% for the month, while services saw a slight 0.1% uptick. Over the past year, fluctuations in food and energy heavily influenced the overall PPI. However, both categories remained stable in May, with food prices rising by 0.1% and energy prices remaining unchanged.

Around 80% of the goods price increase last month stemmed from areas other than food and energy. Economists suggest that the impact of tariffs on prices would first manifest in 'core goods' (goods excluding food and energy).

Although monthly data can be volatile, prices received by producers for durable consumer goods surged by 0.4% in May, marking the largest monthly increase since January 2023, according to BLS data.

Chris Rupkey, chief economist at FwdBonds, noted that inflation in goods prices is still brewing at the producer level, hinting at potential price hikes for consumers in the near future. Excluding food and energy, core PPI also saw a slight rise of 0.1% from April. On an annual basis, core PPI inflation slightly eased to 3% from 3.1%.

PPI acts as a possible indicator for retail-level inflation in the upcoming months. Recent Consumer Price Index data showed that overall inflation for goods and services commonly purchased by Americans rose less than anticipated. Economists caution that President Donald Trump's extensive tariffs are likely to lead to consumer price increases eventually.

This story is developing and will be updated.