US producer prices rebound less than expected in May

WASHINGTON (Reuters) -U.S. producer prices increased less than expected in May, restrained by lower costs for services like air fares.

The producer price index for final demand rebounded 0.1% last month after a revised 0.2% decline in April, the Labor Department's Bureau of Labor Statistics said on Thursday.

Economists polled by Reuters had forecast the PPI rising 0.2% after a previously reported 0.5% drop in April.

In the 12 months through May, the PPI advanced 2.6% after rising 2.5% in April.

Data on Wednesday showed consumer prices increased marginally in May, curbed by cheaper gasoline and airline fares amid cooling demand. But economists expect inflation will heat up in the second half of the year as tariffs-related price hikes filter through to goods.

The Federal Reserve is expected to keep its benchmark overnight interest rate in the 4.25%-4.50% range next Wednesday. The U.S. central bank is expected to resume monetary policy easing in September.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

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