U.S. producer prices increased solidly for a second straight month in May, boosted by a surge in the cost of hotel accommodation and gains in a range of other services, pointing to a steady pickup in underlying inflation pressures.

The report from the Labor Department on Tuesday likely supports the Federal Reserve’s view that the recent weak inflation readings are probably transitory.

Fed policymakers are scheduled to meet on June 18-19 against the backdrop of rising trade tensions, slowing growth and a sharp step-down in hiring in May that have led financial markets to price in at least two interest rate cuts by the end of 2019.

Fed Chairman Jerome Powell said last week that the U.S. central bank was closely monitoring the implications of the trade tensions on the economy and would “act as appropriate to sustain the expansion.” A rate cut is, however, not expected next Wednesday.

Producer prices excluding food, energy and trade services rose 0.4% last month, matching April’s gain, the government said. The so-called core PPI increased 2.3% in the 12 months through May after rising 2.2% in April.

Weaker energy and food prices, however, partially offset the increase in services last month. That led the producer price index for final demand to edge up 0.1% in May after gaining 0.2% in April. In the 12 months through May, the PPI climbed 1.8%, slowing from April’s 2.2% advance.

Economists polled by Reuters had forecast the PPI would nudge up 0.1% in May and rise 2.0% on a year-on-year basis.

U.S. Treasury yields ticked up and the dollar rose to a session high against a basket of currencies after the release of the data. U.S. stock index futures were trading higher.

FOOD PRICES FALL

The services-led increase in the core PPI last month is likely to translate into a slightly higher reading for other underlying inflation measures in May. According to a Reuters survey of economists, core consumer prices probably increased 0.2% last month after nudging up 0.1% in April. The consumer price data will be published on Wednesday.

The Fed’s preferred inflation measure, the core personal consumption expenditures (PCE) price index, increased 1.6 percent in the year to April after gaining 1.5% in March. Data for May will be released later this month.

In May, wholesale energy prices fell 1.0% after rising 1.8% in the prior month. Goods prices slipped 0.2% last month after gaining 0.3% in April.

Wholesale food prices fell 0.3% in May. Core goods prices were unchanged for a second straight month. Prices for hotel accommodation surged 10.1% in May, the most since April 2009.

That accounted for nearly 80 percent of the rise in services prices in May. Services prices rose 0.3% after gaining 0.1% in April.

The cost of healthcare services increased 0.2% last month after increasing 0.3% in April. There were increases in the prices for both inpatient and outpatient care last month. Those healthcare costs feed into the core PCE price index.

There were also gains in prices for passenger transportation and portfolio management.