Inflation Could Impact Fed

A burst of higher inflation is fueling debate about whether the Federal Reserve should move sooner to reduce its support for the U.S. economy than currently anticipated.

Consumer prices rose 0.4% in May from a month earlier, the most in more than a year, the Labor Department said. That reflected higher household costs for everything from groceries and gasoline to rent and medical care. Core prices, which strip out volatile food and energy costs, climbed 0.3%, the most since August 2011.  Tuesday’s report showed the overall consumer-price index up 2.1% from a year earlier.

The Fed targets annual inflation of 2%, a pace it views as healthy for price stability and economic growth. But the central bank prefers a separate measure—the Commerce Department’s price index for personal consumption expenditures—that has shown less-dramatic price increases and inflation still running below its target, at 1.6% in April.


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