Consumer prices rose a scant 0.1% in May, kept in check by cheaper gas. Inflation more broadly showed little sign of rapid deceleration, however.
The increase in consumer prices matched the forecast of economists polled by the Wall Street Journal.
The small rise in inflation last month could cement a decision by the Federal Reserve on Wednesday to skip an increase in interest rates at the end of a pivotal two-day meeting.
The yearly rate of inflation slowed to 4% from 4.9%, marking the lowest level since March 2021. Grocery and gas prices have been on the wane after helping drive up inflation last year.
The so-called core rate of inflation that omits food and energy rose a stiffer 0.4%. Wall Street had forecast a 0.4% gain.
The Fed views the core rate as a better predictor of inflation trends. The increase in the core rate over the past 12 months slipped to 5.3% from 5.5%, the smallest gain since the fall of 2021.
Traders of Fed funds futures now see a Fed interest-rate pause on Wednesday. Interest-rate futures markets expect a 100% chance of a Fed pause when the central bank’s June policy meeting concludes on Wednesday, according to the CME’s FedWatch tool. At the same time, chances of a hike in July rose to 66.5%, up from roughly 60% a day earlier.
Source: MarketWatch