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US Consumer Prices Were Unchanged In May, Against Forecasts Of A Little Increase

US Consumer Prices Were Unchanged In May, Against Forecasts Of A Little Increase
With lower petrol, U.S. consumer prices unexpectedly remained steady in May. However, given the continued strength of the labour market, inflation is probably still too high for the Federal Reserve to begin reducing interest rates until September.
The Labour Department's Bureau of Labour Statistics released an unchanged reading of the consumer price index on Wednesday, which came after a 0.3% gain in April.
Ever since registering strong numbers in February and March, the CPI has been heading downward. Price pressures may lessen further as big-box stores like Target cut costs on everything from food to diapers in an effort to draw in customers who are fed up with inflation.
The CPI increased 3.3% in the 12 months ending in May, following a 3.4% increase in April. According to Reuters surveyed economists, the CPI would rise between 0.1% and 3.4% annually.
Even if the rate of annual growth in consumer prices has decreased from a record of 9.1% in June 2022, inflation is still higher than the 2% objective set by the US central bank.
The government said last week that although earnings grew and job creation surged in May, the jobless rate rose to 4%. Later on Wednesday, it is anticipated that Federal Reserve officials would maintain the benchmark overnight interest rate in the current band of 5.25% to 5.50%, which it has been in since July.
Since March 2022, the Fed has increased its policy rate by 525 basis points.
Though this belief is eroding, financial markets still anticipate the Fed to begin its easing cycle in September. While some analysts believe that rates will be dropped in December, others are less certain that this year's rate cuts will occur.
With food and energy excluded, the CPI increased by 0.2% in May following a 0.3% increase in April.
The core CPI rose 3.4% throughout the course of the year ending in May. It came after a 3.6% increase in April and was the lowest year-over-year growth since April 2021.

Christopher J. Mitchell

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