As a result, many economists think growth in the current April-June quarter will slow from the 2% annual pace in the first three months of the year. From April to May, core prices increased 0.3%, a pace that, if it lasts, would keep inflation well above the Fed’s 2% target.įriday’s report from the government suggested that consumer spending is slowing under pressure from high prices and interest rates, a trend that is also likely cooling inflation. It was the fifth straight month that the core figure was either 4.6% or 4.7% - a sign that the Fed’s streak of 10 rate hikes over the past 15 months hasn’t subdued all categories of prices.

The increase underscored the Fed’s belief that it will need to keep raising interest rates to conquer high inflation.Ĭore prices rose 4.6% in May from a year earlier, down slightly from the annual increase of 4.7% in April. Still, last month’s progress in easing overall inflation was tempered by an elevated reading of “core” prices, a category that excludes volatile food and energy costs. And from April to May, prices ticked up just 0.1%. The inflation index showed that prices rose 3.8% in May from 12 months earlier, down sharply from a 4.4% year-over-year surge in April. WASHINGTON (AP) - An inflation index that is closely monitored by the Federal Reserve tumbled last month to its lowest level since April 2021, pulled down by lower gas prices and slower-rising food costs.Īt the same time, consumers barely increased their spending last month, boosting it just 0.1%, after a solid 0.6% gain in April.

Commerce township gas prices