WASHINGTON • US consumer prices rose marginally last month, pointing to moderate inflation pressures.
The Labour Department said yesterday its Consumer Price Index (CPI) also increased by 0.2 per cent as food prices were unchanged. That followed a similar gain in the CPI in April.
In the 12 months to May, the CPI increased 2.8 per cent, the biggest advance since February 2012, after rising 2.5 per cent in April. Excluding the volatile food and energy components, the CPI rose 0.2 per cent, supported by a rebound in new motor vehicle prices and a pickup in the cost of healthcare, after edging up 0.1 per cent in April. That lifted the year-on-year increase in the so-called core CPI to 2.2 per cent, the largest rise since February last year, from 2.1 per cent in April.
Annual inflation measures are rising as last year's weak readings fall from the calculation. Economists had forecast both the CPI and core CPI rising 0.2 per cent last month. The inflation data was published ahead of the start of the Federal Reserve's two-day policy meeting yesterday.
The US central bank tracks a different inflation measure, which is just below its 2 per cent target. The Fed is expected to raise interest rates for a second time this year today.
Economists are divided on whether policymakers will signal one or two more rate hikes in their statement accompanying the rate decision. The Fed's preferred inflation measure, the personal consumption expenditures price index excluding food and energy, rose 1.8 per cent on a year-on-year basis in April, matching March's increase.
Economists expect the core PCE price index will breach its 2 per cent target this year. Fed officials have indicated they would not be too concerned with inflation overshooting the target.
Last month, petrol prices rose 1.7 per cent after surging 3 per cent in April. Food prices were unchanged in May after rising 0.3 per cent in the prior month.