Instant View: May producer prices rose, housing starts fell

NEW YORK (Reuters) - U.S. producer prices rose by a larger-than-expected 1.4 percent in May after another jump in energy prices, but core inflation at the producer level moderated as forecast, government data on Tuesday showed.

U.S. home building projects started in May fell by 3.3 percent to a lower-than-expected annual rate while building permit activity, a sign of future construction plans, dropped off 1.3 percent, a government report on Tuesday showed.

KEY POINTS:

PPI:

* Economists polled by Reuters had expected producer prices - a gauge of costs at the farm and factory gate - would rise 1.0 percent after increasing 0.2 percent in April.

* The Labor Department said producer prices over the last 12 months were up 7.2 percent in May, the eighth consecutive month prices rose more than 6 percent on a yearly basis.

* The last time PPI produced this many straight months of above 6 percent year-over-year readings was the period between 1977 and 1982, a Labor Department official said.

* Core producer prices, which strip out volatile energy and food costs, increased by 0.2 percent as expected, slowing from a 0.4 percent gain in April.