The Labor Department said on Friday its producer price index for final demand increased 0.5 percent last month, the largest gain since September 2012. That followed a 0.4 percent decline in April.
In the year to May, the PPI fell 1.1 percent, marking the fourth straight 12-month decrease. Prices dropped 1.3 percent in the 12 months through April, the biggest fall since 2010.
Economists had forecast the PPI rising 0.4 percent last month and falling 1.1 percent from a year ago.
A sharp decline in crude oil prices since last year and a strong dollar have weighed on producer prices. While rising oil prices are easing some of the downward pressure on inflation, the upward trend in producer prices will be gradual because of the dollar’s strength.
The greenback has gained about 13.2 percent against the currencies of the United States’ main trading partners since June 2014.
The stabilization in producer prices should support views that the Federal Reserve will raise interest rates this year.
Last month, gasoline prices surged 17 percent, the largest increase since August 2009. Food prices rose 0.8 percent in May, the biggest gain in just over a year, snapping five straight months of declines.
Higher food prices were driven by a shortage of eggs after an outbreak of bird flu led to the culling of millions of chickens. Wholesale egg prices soared a record 56.4 percent last month.