The numbers: Consumer prices rose a scant 0.1% in May — held in check by cheaper gas — and could cement a decision by the Federal Reserve to “skip” an increase in interest rates this week.
The small rise in consumer prices matched the forecast of economists polled by the Wall Street Journal. Yet the so-called core rate of inflation that omits food and energy rose a stiffer 0.4% for the third month in a row, the government reported. Wall Street had forecast a 0.4% gain. The cost of groceries rose slightly in May after two declines in a row. Still, the yearly increase slowed to 5.8% last month from a peak of 13.5%.
Big picture: The doggedly high rate of inflation is far from the Fed’s 2% target and senior officials think it could take a few years to reach its goal.The Fed has jacked up a key short-term rate by 5 percentage points since the spring of 2022 from near zero. Now it wants to see how higher borrowing costs affect inflation and economic growth. That’s why many senior Fed officials appear to prefer to skip a rate hike this week.