ISM Services Prices Index Hits Highest Since Aug 2022, Signaling Rising Inflation
The ISM Services Prices index rose 0.6 points in May to 71.3, the highest since August 2022, with diesel, gasoline, and oil cited as key drivers. The reading suggests CPI could rise above 5.0% for the first time since early 2023.
A key measure of U.S. services inflation climbed further in May, with the ISM Services Prices index increasing 0.6 points to 71.3—the highest level since August 2022. Since February, the index has surged 8.3 points, marking the largest three-month gain since 2021.
Survey respondents most frequently cited diesel, gasoline, oil, and related commodities as rising in price. No commodities were reported as declining in May. Historically, rapidly rising services prices have led CPI inflation with a lag of approximately three months.
If the pattern holds, the current reading points to CPI rising above 5.0%—a level not seen since early 2023—compared to the 3.8% year-over-year reading recorded in April. The data adds to mounting evidence of persistent inflationary pressures in the U.S. economy.
Source: The Kobeissi Letter