car at gas station
The Labor Department said Thursday that U.S. consumer prices in May posted their largest gain since February 2013, fueled by a rebound in gasoline prices.
The Consumer Price Index rose 0.4 percent last month after gaining 0.1 percent in April, indicating the disinflationary trend due to gas prices may have come to and end. Yet, the gain left the CPI unchanged in the 12 months through May after a 0.2 percent yearly decline in April.
Economists polled by Reuters had forecast the CPI rising 0.5 percent from April — a slight miss — and unchanged from a year ago. Still, despite the 10.4 percent increase in gas prices, the biggest gain since June 2009, a relatively strong dollar compared to intentionally unvalued currency is pushing back on inflation pressures.
The so-called core CPI, which excludes food and energy costs, increased by just 0.1 percent, which is the smallest rise since December of this year. The core CPI gained 0.3 percent in April, and in the 12 months through May, the core CPI rose 1.7 percent after an annual gain of 1.8 percent in April.
The Federal Reserve policy-making committee decided they will not raise interest rates until later this year, abandoning their mid-June target for sometime in September.
Food prices were unchanged for a second straight month, as an outbreak of bird flu in some impacted areas of the country led to a shortage of eggs that may still push up food prices in the months ahead.
Rental costs increased by 0.3 percent, which are likely to continue to rise with the residential vacancy rate near a 22-year low. The medical care index increased 0.2 percent after rising 0.7 percent in the prior month, while there were also small increases in the prices of new motor vehicles, tobacco and alcoholic beverages.
Prices for apparel, used cars and trucks, and household furnishings fell.
