The Producer Price Index - PPI to its friends - is a Bureau of Labor Statistics index that tracks the change in manufacturing costs in the United States. If PPI goes up, that implies rising inflation (although it doesn't always prove it, since bad economic conditions can make it difficult to pass production costs on to consumers). Analysts like neutral numbers here; mild increases are tolerable, as are mild decreases. Large jumps are likely to send everyone into a panic about "skyrocketing inflation" or "deflationary death spirals".
For what it's worth, last month demonstrated that "deflationary death spirals" are not on the agenda right now. PPI for finished goods rose 0.8% in April (missing expectations), while core PPI for finished goods rose 0.3% (also missing expectations). Interestingly enough, PPI for finished foods (the foods you buy in the grocery store, whether fresh or canned) rose 0.3%,driven by a 56.7% increase in the cost of eggs. PPI for intermediate goods rose 1.3%, and PPI for crude goods rose 4.0%.
The Econoday-surveyed analysts are fairly confident that May will have better results. They're calling for a 0.1% increase in PPI for finished goods, with core PPI for finished goods rising 0.2%. And the question now is, are they right?
And the answer is, according to the BLS Producer Price Indexes - May 2011 release, not really. Although they came close. PPI for finished goods rose 0.2% in May, with the core PPI for finished goods also rising 0.2%. PPI for finished food fell 1.4% (driven by a 12.2% decline in prices for fresh and dry vegetables) while PPI for finished energy rose 1.5% (driven by a 2.7% increase in gasoline prices). PPI for intermediate goods rose 0.9%,and PPI for crude goods fell 4.1% (driven by a 4.7% decrease in the cost of copper).
So, yes, expectations were missed. But, particularly with that massive decline in crude goods costs getting ready to work its way through the production cycle, I doubt anyone will mind all that much.
 Well, it makes it difficult if you intend to sell those more expensive products. Particularly if you produce luxury goods that consumers can do without when push comes to shove.