US Inflation Sees Smallest Annual Increase in Over Two Years, But Underlying Pressures Remain Strong
Overview
US consumer prices rose slightly in May, leading to the smallest annual increase in inflation in more than two years, but underlying inflationary pressures remained strong, fueling expectations that the Federal Reserve (US central bank) will leave interest rates unchanged tomorrow on Wednesday.
The Numbers
The Labor Department said on Tuesday that the consumer price index rose 0.1% last month as gasoline prices fell. In April, the index rose by 0.4%.
In the twelve months to May, the index rose 4%, the smallest annual gain since March 2021, after rising 4.9% in April.
Economists’ Expectations
Economists had expected the CPI to rise 0.2% m/m and 4.1% y/y last month, according to a Reuters poll.
Core Consumer Price Index
The core consumer price index rose 0.4% in May, marking the same growth rate for the third month in a row.
In the twelve months to May, the core consumer price index rose 5.3% after rising 5.5% in April.
