Jun 18, 2013
US consumer prices rise, core prices bode well for demand
Jun 18, 2013
WASHINGTON, United States - U.S. consumer prices rose in May and a gauge of underlying price pressures showed signs of stabilizing after a long decline, a potential comfort to Federal Reserve policymakers who would like to see stronger inflation.
The Labor Department said on Tuesday its Consumer Price Index edged 0.1 percent higher, a slightly weaker gain than analysts polled by Reuters had expected.
But in a sign of stronger demand in the economy, consumer prices outside of food and energy rose 0.2 percent last month, just above the pace clocked in April.
These so-called "core" consumer prices, which U.S. central bankers monitor closely because they are less volatile, were up 1.7 percent in the 12 months through May. That matched the increase registered in April, and supported the view that a worrisome downward trend in core inflation, which began a year ago, might be coming to an end.
While May's reading for 12-month core inflation remains below the Fed's 2 percent inflation target, a stabilization could make the Fed more comfortable paring back its economic stimulus programs as soon as this year.
In May, the gain in the core price index was supported by a 0.2 percent increase in clothing prices, as well as a strong 0.3 percent increase in shelter costs.
The Fed actually targets a separate but related measure of inflation published by the Commerce Department, known as the PCE index, which has shown even weaker levels of core price increases. The PCE index puts less weight on shelter, so Tuesday's data might not signal a similar stabilization in the core PCE index.
The Fed starts a two-day policy meeting on Tuesday.
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