U.S. consumer prices barely rose in May, pointing to moderate inflation that tog...
WASHINGTON - U.S. consumer prices barely rose in May, pointing to moderate inflation that together with a slowing economy increased pressure on the Federal Reserve to cut interest rates this year.
U.S. central bank policymakers are scheduled to meet on June 18-19 against the backdrop of rising trade tensions, slowing growth and a sharp step-down in hiring in May that has led financial markets to price in at least two rate cuts by the end of 2019. A rate cut is not expected next Wednesday. In the 12 months through May, the CPI increased 1.8%, slowing from April’s 1.9% gain. May’s rise in the CPI was broadly in line with economists’ expectations.
Data so far have suggested a sharp slowdown in U.S. economic growth in the second quarter after a temporary boost from exports and an accumulation of inventory early in the year. Job growth slowed sharply in May. Manufacturing production, exports and home sales dropped in April, while consumer spending cooled.
The Fed’s preferred inflation measure, the core personal consumption expenditures price index, increased 1.6 percent in the year to April after gaining 1.5% in March. Data for May will be released later this month. The core PCE price index has been running below the Fed’s 2% target this year. Apparel prices were unchanged in May after tumbling 0.8% in the prior month. They had declined for two months in a row after the government introduced a new method and data to calculate apparel prices. Economists expect the duties on Chinese goods to lift apparel prices in the coming months.
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