Producer prices up 0.5% from April, 3.1% in past year

WASHINGTON (AP) — U.S. wholesale prices last month posted the biggest 12-month gain since January 2012, a sign that the strong economy is beginning to rouse inflation.

The Labor Department said Wednesday that its producer price index— which measures inflation before it reaches consumers— rose 3.1 percent from May 2017. The index rose 0.5 percent from April, biggest one-month increase since January. In April, producer prices rose just 0.1 percent.

Energy prices, pulled higher by surging gasoline prices, rose 4.6 percent last month from April, the biggest jump in three years.

Food prices rose just 0.1 percent, and seafood prices fell a record 13.1 percent.

Core wholesale prices — which excludes the volatile food and energy sectors — rose 0.3 from April and 2.4 percent from May 2017.

The Federal Reserve is expected to raise short-term interest rates Wednesday for the second time this year and the seventh time since December 2015 as inflation hits the central bank's annual 2 percent target.

On Tuesday, the Labor Department reported that consumer prices rose 0.2 percent in May, largely on soaring gasoline costs, and 2.8 percent over the past year, fastest 12-month jump since February 2012.

But core consumer prices have risen a milder 2.2 percent over the past 12 months.