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.
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