U.S. inflation slows, giving room for Federal Reserve to pause rate hikes - BNN Bloomberg

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U.S. inflation slowed in May, supporting the case for Federal Reserve officials to pause their run of interest-rate hikes this week.

Both the consumer price index and the core CPI — which excludes food and energy — decelerated on an annual basis, highlighting inflation’s descent since peaking last year. At 4 per cent, year-over-year inflation is now at its lowest level since March 2021, according to data out Tuesday from the Bureau of Labor Statistics.

Several policymakers, including Chair Jerome Powell, have signalled they prefer to skip a rate hike at the June 13-14 meeting, while still leaving the door open to future tightening if needed. Economists generally agree the central bank will leave rates unchanged Wednesday, but the next CPI report due in July will play a key role in determining what the Fed will do at that month’s meeting.

The details showed shelter, used cars and motor vehicle insurance all contributed to the monthly advance. Meantime, airfares and household furnishings declined. The gasoline price index fell 5.6 per cent. Grocery prices edged higher after falling for two straight months, while dining out got more expensive.

 

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