US Consumer Prices Rise in May

U.S. consumer prices in May recorded their largest increase in more than two years as gasoline prices surged, suggesting an energy-driven disinflationary trend had probably run its course.

The Labor Department said on Thursday its Consumer Price Index rose 0.4 percent last month after gaining 0.1 percent in April. That was the largest increase since February 2013, and 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 and unchanged from a year ago. While energy prices are stabilizing, a strong dollar is curbing underlying inflation pressures.

The so-called core CPI, which strips out food and energy costs, increased 0.1 percent, the smallest rise since December, after advancing 0.3 percent in April. In the 12 months through May, the core CPI rose 1.7 percent after a yearly increase of 1.8 percent in April.

Given a tightening labor market, which is expected to spur stronger wage growth, the retreat in underlying inflation pressures likely does not change views that the Federal Reserve will raise interest rate later this year.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza