Falling prices for energy and used cars held down US inflation in May, extending the long run of soft price pressures, according to government data released Wednesday.
The latest confirmation of the absence of inflation should comfort markets hoping the Federal Reserve will cut interest rates in the coming months to boost the economy, especially amid President Donald Trump’s multi-front trade wars. The central bank is due to hold its next policy meeting next week but most investors do not expect the Fed to announce any changes so soon.
The Consumer Price Index -- which tracks costs for household goods and services -- rose a token 0.1 percent compared to April, matching analyst forecasts, the Labor Department reported.
Food prices jumped 0.3 percent in the month, but that was more than offset by a steep 0.6 percent decline in energy costs.
Compared to May of last year, prices are up 1.8 percent, slowing from the two percent increase in April.
When the volatile food and fuel categories are excluded, “core” inflation also rose 0.1 percent for the fourth month in a row, falling just shy of a consensus forecast.
Compared to May of last year, the core CPI is two percent higher, slowing slightly from the 2.1 percent pace of a month earlier.