Inflation Posts Largest Gain In More Than Two Years

Posted: June 18, 2015 in Economics

family-groceryU.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.

Other data on Thursday showed the labor market continued to tighten, as first-time applications for unemployment benefits declined last week to a near 15-year low. The slight pickup in inflation and a strengthening labor market put the Federal Reserve a step closer to raising interest rates later this year.

The Consumer Price Index rose 0.4 percent last month after gaining 0.1 percent in April, the Labor Department said. 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.

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.

The U.S. central bank on Wednesday noted the stabilization in energy prices and expressed confidence that inflation will gradually move toward its 2 percent target. The Fed has kept its short-term lending rate near zero since December 2008.

Full Story @ [Reuters]

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