A report released by the Labor Department on Tuesday showed another modest increase in consumer prices in the U.S. in the month of May.
The Labor Department said its consumer price index rose by 0.2 percent in May, matching the increase seen in April as well as economist estimates.
Energy prices climbed by 0.9 percent in May after jumping by 1.4 percent in April, with a 1.7 percent spike in gasoline prices offsetting decreases by some of the other energy component indexes.
Excluding food and energy prices, core consumer prices still increased by 0.2 percent in May after inching up by 0.1 percent in April. The core price growth also matched expectations.
The uptick in core consumer prices was partly due to a 0.3 percent increase in shelter costs, which reflected a 2.9 percent jump in hotel room rates.
Prices for new vehicles, education and communication, and tobacco also rose in May, while prices for household furnishing and operations and used cars and trucks fell.
The annual rate of consumer price growth accelerated to 2.8 percent in May from 2.5 percent in April, reaching its highest level since February of 2012.
Core consumer price growth also edged up to a fifteen-year high of 2.2 percent in May from 2.1 percent in the previous month.
Michael Pearce, Senior U.S. Economist at Capital Economics, said the consumer price growth will keep the Federal Reserve on course to raise interest rates on Wednesday.
"We expect underlying inflation to trend gradually higher from here, which will prompt the Fed to hike rates twice in the second half of the year," Pearce said.
Ahead of the Fed announcement on Wednesday, the Labor Department is scheduled to release a separate report on producer prices in the month of May.
Economists expect producer prices to rise by 0.3 percent in May, while core producer prices are expected to edge up by 0.2 percent.
by P2PNews Staff Writer