Less-expensive gas likely slowed U.S. consumer inflation in May. But when the government reports the latest monthly price data Wednesday, Wall Street traders and Federal Reserve officials will be paying particularly close attention to an index that excludes volatile food and energy costs. These so-called “core” prices are expected to have risen 0.
A shopper pauses at a display in a furniture store Sunday, June 2, 2024, in Englewood, Colo. On Wednesday, June 12, 2024, the Labor Department issues its report on prices at the consumer level in May. Customers queue up to order at an In-N-Out restaurant Sunday, June 2, 2024, in Lone Tree, Colo. On Wednesday, June 12, 2024, the Labor Department issues its report on prices at the consumer level in May.
The Fed is closely monitoring each month’s inflation report for signs that it’s succeeding in its fight against rising prices. A rise in core consumer prices of 0.3% is too high, over time, to be consistent with the central bank’s 2% annual inflation target and could be seen as a disappointment. Still, the Fed’s officials prefer a separate inflation measure, which typically comes in slightly lower than Wednesday’s consumer price index.
The longer the Fed keeps borrowing costs high, the more it risks weakening the economy too much and potentially causing a recession. Yet if it cuts rates too soon, it risks reigniting inflation. Most of the policymakers have said they think their rate policies are slowing growth and should curb inflation over time.
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