US consumer prices dip 0.1 percent in May

Share

WASHINGTON, June 14 USA consumer prices unexpectedly fell in May as the cost of gasoline and a range other goods declined, pointing to a moderation in inflation pressures that could impact on further interest rate increases this year.

Last month, rental costs increased 0.3 percent, matching April's gain.

The RBI cut inflation estimates for the financial year to March 2018 after retail inflation dipped to an historic low in April.

Falling US gasoline prices drove both inflation and retail sales down in May, according to government data released today.

The retail data, along with May inflation data, give the Federal Reserve the most up-to-date picture of the economy as policymakers finalize their expected decision to hike the central bank's key interest rate on Wednesday and provide guidance about future policy.

The BLS noted that a 2.7% decrease in the energy index was the main contributor to the monthly fall. The Atlanta Fed is forecasting GDP rising at a 3.2 percent annualized rate in the second quarter.

Inflation has picked up speed around the world but in Britain there is extra pressure from the fall in sterling, which contributed to the slowdown in economic growth this year.

The Canadian dollar rose 0.45 percent, hitting its highest against the US dollar since February 27.

There were 1.53 million unemployed people in the three months to April and 31.95 million people in work, again with the 74.8% employment rate standing at the joint highest level since comparable records began in 1971.

The rate is above the Bank of England 2 per cent target and the highest since June 2013. A decline in wireless phone prices also has curbed inflation readings amid a restoration of unlimited data plans by Verizon (VZ). USA stock index futures pared gains.

The Fed hiked its benchmark overnight interest rate by 25 basis points to range of 1.00 percent to 1.25 percent, and said it would start reducing its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities this year.

Earlier this year, the Bank forecast that CPI would reach 2.8% by the end of the year but the latest figures show it has already exceeded that. So-called core inflation, which strips out volatile prices for food and energy, rose at a 2.6% pace, the ONS said, the fastest since 2012.

Auto sales fell 0.2 percent after rising 0.5 percent in April.

Over the past two months alone, CPI has risen by 0.6%. May's decline was the largest since January 2016 and confounded economists' expectation for a 0.1 percent gain.

Share