WASHINGTON -- Consumer prices declined in May, reflecting a big drop in energy prices and smaller declines in a number of other areas. It was the second monthly decline in the past three months and underscores how inflation has been a no-show in the slow-growing U.S. economy.
Consumer prices edged down 0.1 percent last month after a 0.2 percent increase in April, the Labor Department reported Wednesday. Prices had fallen 0.3 percent in March. In addition to a drop in energy costs last month, the price of clothing, airline fares and medical care also declined.
Core inflation, which excludes energy and food, rose a slight 0.1 percent in May.
Some economists suggested that the unexpected slowdown in inflation in recent months may cause the Federal Reserve to slow the pace of interest rate increases. The Fed's Open Market Committee voted Wednesday to raise its benchmark rate by a quarter of a percentage point.
Over the past 12 months, consumer prices are up 1.9 percent while core inflation has risen 1.7 percent. The Fed seeks to manage interest rates to promote moderate annual gains in inflation of 2 percent. The Fed's preferred measure of inflation, tied to consumer spending, has been below 2 percent for five years and in recent months slipped back a bit.
However, Fed officials have said they believe the recent slowdown in price gains reflected transitory factors and they expect inflation will resume moving toward 2 percent as low unemployment helps to drive up wages. Unemployment in May dipped to 4.3 percent.
A Section on 06/15/2017