--US May producer prices +0.1%; core rate +0.2%
--US May producer prices ex-energy +0.1%; energy prices +0.2%
--US May producer cigarette prices +5.6%
--US May PPI excluding cigarettes -0.1%
--US May producer gasoline prices +0.4%; heating oil +8.0%
--US May food producer prices -0.4%
--US May producer car prices -0.1%, light trucks -1.6%
--US May producer capital equipment prices -0.1%, computers -1.0%
--US May intermediate producer prices +0.1%; core +0.1%
--US May crude producer prices -2.3%; core -0.2%

By Simon Kennedy Washington, June 14 (BridgeNews) - More costly tobacco and energy products pushed U.S. producer prices up 0.1% in May, but outside these volatile elements wholesale inflation was tame, the Labor Department announced Thursday. Excluding food and energy, producer prices rose 0.2%. Excluding cigarettes, the PPI and the core PPI both fell 0.1%. Analysts were expecting both the overall and core indexes to rise 0.2%. * * *
A 5.6% jump in cigarette prices reflects an attempt by manufacturers in May to offset legal costs, although the increase was only the largest since January. Energy prices also underpinned the index as heating oil costs surged 8.0%, the steepest climb since September. Gasoline costs rose 0.4%, and residential natural gas rose 0.2%. Offsetting these gains, liquefied petroleum gas prices decreased 7.4%.
Prices for book publishing, men's apparel, household furniture and jewelry also increased. But in a report likely to hearten an inflation-wary Federal Reserve, food prices fell 0.4%, while the cost of passenger cars dropped 0.1%. A 1.6% decline in light truck costs was the biggest decline in that sector since February. The indexes for textiles, home furnishings and health products also dropped, while capital equipment prices fell 0.1% and computer prices fell 1.0%.
CRUDE AND INTERMEDIATE GOODS
Providing further room for policy maneuver at the Federal Reserve, prices of intermediate and crude goods--which provide an insight into price conditions earlier in the production pipeline--also remained under control in a possible sign that prices are being adjusted in response to lessening demand. Intermediate goods prices moved up 0.1%, while the core intermediate goods index, widely watched for signs emerging price pressures, also climbed 0.1%. In April, intermediate goods prices fell 0.2%, while the core slipped 0.1%. Crude prices plunged 2.3%, while core crude prices dropped 0.2%. In April, crude fell 0.9% and core crude prices slumped 2.6%. In April, the producer price index for finished goods increased 0.3%, slightly more than the core rate's 0.2% advance.
With the Federal Reserve having cut interest rates 2.5 percentage points since January, some analysts are worried that inflation may begin to pick up. But Thursday's report is likely to allay such concerns, giving the Fed room to cut rates further in the interest of jump starting a sluggish economy when officials next meet June 26-27.
WHAT WAS EXPECTED
The PPI came in at the low end of the estimates of private analysts, which ranged from up 0.1% to 0.4%. Estimates for the core rate ranged from flat to up 0.2%.