Consumer prices rise less than expected

The consumer price index (CPI) rose 0.2% in May, slightly less than expected, according to the Bureau of Labour Statistics.

Energy costs led the price increases that lifted the overall index, following a rebound in commodity prices including crude oil.

Food costs fell across the board.

Excluding these two volatile categories, core CPI rose 0.2% month-on-month, and increased 2.2% year-on-year, as expected.

Economists had estimated that CPI rose 0.3% month-on-month in May, according to Bloomberg.

Year-on-year, CPI rose 1%, in line with forecasts.

Looking at the 12 months through May, the costs of rent, transportation and medical care continued to have the biggest advances. This further shows that the biggest strides in inflation continue to be in shelter and services costs.

The Federal Reserve is betting that inflation will continue to rise towards its 2% target, validating a gradual increase in interest rates.

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