The Labor Department released its highly anticipated report on consumer price inflation in the month of May on Tuesday, showing prices edged slightly higher.
The report said the consumer price index inched up by 0.1 percent in May after climbing by 0.4 percent in April. Economists had expected prices to tick up by 0.2 percent.
A steep drop in energy prices helped limit the upside for consumer prices, with the energy index plunging by 3.6 percent in May following a 0.6 percent increase in April.
Excluding food and energy prices, core consumer prices rose by 0.4 percent in May, matching the increase seen in each of the two previous months as well as economist estimates.
The core price growth reflected a continued advance by prices for shelter as well as another 4.4 percent spike in prices for used cars and trucks.
Prices for motor vehicle insurance, apparel, and personal care also increased, while prices for household furnishings and operations and airline fares were among those that decreased over the month.
The Labor Department also said the annual rate of consumer price growth slowed to 4.0 percent in May from 4.9 percent in April. Economists had expected the pace of growth to slow to 4.1.
The year-over-year growth in May marked the smallest annual increase since the period ending March 2021.
The annual rate of core consumer price growth also slowed to 5.3 percent in May from 5.5 percent in April, in line with expectations.
"The May consumer price index doesn't alter the Fed's plan to pause this week and the recent drop in oil prices support our forecast for the central bank to remain on hold through the remainder of this year before starting to cut interest rates in early 2024," said Ryan Sweet, Chief U.S. Economist at Oxford Economics.
On Wednesday, the Labor Department is scheduled to release a separate report on producer price inflation in the month of May.
Economists expect producer prices to edge down by 0.1 percent in May after rising by 0.2 percent in April, while the annual rate of growth is expected to slow to 1.5 percent from 2.3 percent.
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