Washington, DC, United States (4E) – Consumer prices in the U.S. rose at the fastest rate in over a year in May, continuing an elevated level of inflation that could weigh on Federal Reserve officials as they decide whether to increase short-term interest rates.
The consumer-price index (CPI), which gauges how much Americans pay for everything from food to health care, increased to a seasonally adjusted 0.4 percent in May from the previous month, according to the Labor Department report released Tuesday. Last month’s gain was the fastest rise since February 2013 and came after prices advanced 0.3 percent in April and 0.2 percent in March.
The price increases in May were broad-based as the so-called “core” prices, which excludes food and energy components, rose 0.3 percent, the fastest pace since August 2011.
Economists polled by The Wall Street Journal had predicted a 0.2 percent gain in both overall and core prices in May from the previous month.
Overall prices rose 2.1 percent in May from a year ago, the fastest since October 2012. Core prices edged higher 2 percent, the most since February 2013.
The Fed sets an annual inflation target of 2 percent, suggesting robust economic growth and price stability. The CPI has reached 2 percent a few times in the last two years.