U.S. Inflation Slows, Price Pressure Persists
U.S. consumer prices barely rose in May and the annual increase in inflation was the smallest in more than two years, reports from the Labour Department showed.
However, underlying price pressures remained strong, supporting the view that the Federal Reserve would keep interest rates unchanged.
The smaller-than-expected rise in the Consumer Price Index, reported by the Labor Department on Tuesday, reflected decreases in the costs of energy products and services, including gasoline and electricity.
But rents remained sticky and prices of used cars and trucks rose further. The report was published as Fed officials began a two-day policy meeting.
TheCPI increased by 0.1% last month after gaining 0.4% in April. Gasoline prices dropped 5.6%, while electricity declined for a third straight month. Utility gas also cost less.
But food prices rose 0.2% after being unchanged for two consecutive months as fruits and vegetables, nonalcoholic beverages and other food products became more expensive.
Meat and fish, however, were cheaper, while egg prices fell 13.8%, the most since January 1951. It cost more to dine out.
In the 12 months through May, the CPI climbed 4.0%. That was the smallest year-on-year increase since March 2021 and followed a 4.9% rise in April.
The annual CPI peaked at 9.1% in June 2022, which was the biggest increase since November 1981, and is subsiding as last year’s large rises drop out of the calculation.
Economists had forecast the CPI would gain 0.2% last month and increase 4.1% on a year-on-year basis.
President Joe Biden welcomed the moderation in prices. “While there is more work to do … I’ve never been more optimistic that our best days are ahead of us,” Biden said in a statement.
Meanwhile, Stocks on Wall Street rose, with the S&P 500 and Nasdaq indexes hitting fresh one-year highs.
The dollar fell against a basket of currencies. U.S. Treasury prices rose after the data.
Reuters/Hauwa Abu
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