Washington, Jun 11 (AP) US inflation picked up a bit last month as food costs rose, though overall inflation remained mostly tame.

Consumer prices increased 2.4 per cent in May compared with a year ago, according to a Labour Department report released Wednesday. That is up from a 2.3 per cent yearly increase in April. Excluding the volatile food and energy categories, core prices rose 2.8 per cent for the third straight month. Economists pay close attention to core prices because they generally provide a better sense of where inflation is headed.

The figures suggest inflation remains stubbornly above the Federal Reserve's 2 per cent target, which makes it less likely that the central bank will cut its key short-term interest rate. President Donald Trump has repeatedly urged the central bank to reduce borrowing costs.

There were scattered signs that Trump's tariffs may have contributed to some price increases, but the cost of some imported goods, such as clothing, fell in May from the previous month and many services, such as airline fares and hotel rooms, also dropped in price.

On a monthly basis, overall prices ticked up just 0.1 per cent from April to May, down from 0.2 per cent previous month. Core prices also dropped to 0.1 per cent from 0.2 per cent.

Grocery prices rose 0.3 per cent from April to May, and are up 2.2 per cent in the past year. Fruits and vegetables, breakfast cereals, and frozen foods all rose in price. Egg costs fell 2.7 per cent, their second straight drop though they are still more than 40 per cent more expensive than a year ago.

Last week, the Labour Department's Bureau of Labour Statistics, which compiles the inflation data, said it is reducing the amount of data it collects for each inflation report. Economists have expressed concern about the cutback, and while it isn't clear how sharp the reduction is, most analysts say it is likely to have a minor impact. Still, any reduction in data collection could make the figures more volatile.

Inflation has cooled in the past year and, excluding the impact of tariffs, economists say it would be on track to return to the Fed's target, which would allow the central bank to cut its key interest rates. Yet core prices have been more stubborn and were stuck between 3.2 per cent and 3.4 per cent for nearly a year until February, when they started to decline. They have now been at 2.8 per cent for three straight months.

Nearly all economists expect Trump's duties will make many things more expensive in the second half of this year, including cars and groceries, though by how much is still uncertain. Trump said Wednesday the US will place 55 per cent tariffs on all imports from China, up from the previous level of 30 per cent. He has also imposed a 10 per cent baseline tariff on imported goods from every other country, and 50 per cent import taxes on steel and aluminum.

Given the potential for higher prices in the coming months, Fed Chair Jerome Powell and other Fed officials have made clear they will keep their key rate unchanged until they have a better sense of how tariffs will affect the economy. (AP) GSP

View Source

Login to TaxTMI

Username/Email Address

Password

Remember Me (auto-login)

By checking this you will be auto logged in, if required, for next 3 days (unless manually logged out)

Log In

Forgot Password ?

Inflation rose slightly last month as grocery prices ticked higher

The Email Id has not been verified. Click on the link we have sent on

Go Back Done

Didn't receive the mail? Resend Mail

Don't have an account? Register Here