Rising gasoline prices drive US inflation higher| MENAFN.COM

Wednesday, 07 December 2022 10:41 GMT

Rising gasoline prices drive US inflation higher

(MENAFN- AFP) A surge in gasoline prices pushed US consumer inflation modestly higher in May, the fourth month in a row of gains, the Labor Department said Thursday.

The consumer price index (CPI) rose 0.4 percent in May, almost entirely driven by a 10.4 percent jump in gasoline prices, rebounding from a decline in April.

Food prices were unchanged for a second straight month.

Compared with a year ago, overall CPI was unchanged.

Stripping out food and energy prices, core CPI edged up 0.1 percent, its smallest increase since December. Core prices were up 1.7 percent from a year ago.

May inflation was a bit weaker than expected. On average, analysts estimated a 0.5 percent rise in CPI and a 0.2 percent rise in core CPI.

The Federal Reserve says tepid inflation is largely due to transitory factors, such as the decline in oil prices in the past year. It expects inflation to move back toward its 2.0 percent target as the economy strengthens this year.

The Fed's preferred inflation measure, the personal consumption expenditures price index, was virtually flat in April, while the core PCE index edged up 0.1 percent, the same increase as in March.

On Wednesday the Fed left its benchmark interest rate unchanged at near zero, but Chair Janet Yellen said the first hike in nine years would likely come "later this year". Most analysts have predicted the increase will come in September.

"Inflation is slowly moving in the right direction but if we continue to get tepid gains in the core measure, the Fed may wait until December," said Ryan Sweet of Moody's Analytics.

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