Inflation eased last month to a multiyear low, a possible cause for optimism ahead of a crucial Federal Reserve meeting on interest rates.
Shoppers have had to make some tough calls as prices surged over the last three years.
Consumer prices rose 4% in May year over year, the Labor Department said Tuesday, coming in slightly below consensus economist estimates of 4.1%.
That’s the lowest inflation rate since March 2021, when prices rose at 2.6% on an annual basis.
Still, inflation remains far above the Fed’s 2% goal, and the consumer price index is up 19% compared to May 2020.
Core inflation, which excludes historically volatile food and energy prices, rose 0.4% last month, in line with expectations of 0.4%.
The U.S. is amidst its most persistent stretch of inflation in nearly four decades due to pandemic-era supply chain snarls, Russia’s invasion of Ukraine’s impact on energy and commodity prices and soaring rent prices, among other factors. Inflation peaked at 9.1% a year ago, though the Federal Reserve’s dramatic interest rate bumps have slowed runaway prices.
Whether the Fed’s Open Market Committee will raise interest rates following the conclusion of its two-day meeting Wednesday. The futures market prices roughly an 80% chance the Fed will keep rates flat at 5% to 5.25%, according to CME Group’s FedWatch Tool. That would be the first time the Fed forgoes a rate hike since last January, when the federal funds rate sat at 0% to 0.25%— and inflation ran at 7.5%.
This is a breaking news story and will be updated…
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