Inflation in the US slowed again last month, giving room for the Federal Reserve Board to pause raising interest rates after its two-day meeting on Wednesday.
The consumer price index increased by 0.1 per cent in May after increasing 0.4 per cent in April, data from the Labour Department showed. Prices rose 4 per cent on an annual basis, down from 4.9 per cent in April.
Core inflation, which excludes food and energy, rose 0.4 per cent last month, in line with estimates.
The overall consumer price index was aided by a 3.6 per cent decrease in energy costs. The food index rose 0.2 per cent after a decrease of 0.2 per cent in April.
“Today’s report is good news for hard-working families. It shows continued progress tackling inflation at the same time that unemployment remains at historic lows,” President Joe Biden said.
The latest inflation report arrived as policymakers at the Fed begin their two-day meeting to determine the next steps in tackling inflation.
The Fed has raised its benchmark federal funds rate to the target range of 5 and 5.25 per cent since March of last year in a series of 10 consecutive rate increases.
It has become one of the central bank's most audacious attempts to rein in the high cost of goods since inflation peaked at 9 per cent last summer.
But inflation has gradually declined since then, slowly inching closer to the Fed's 2 per cent target. And while inflation is expected to remain north of 2 per cent by the end of the year, Fed officials are seeing signs that the nation's economy is slowing.
The central bank has been particularly bedevilled by a resilient labour market. Job gains remained robust last month with 339,000 positions added, although wage growth slowed.
The central bank is widely expected to keep rates steady after its two-day meeting on Wednesday, data from the CME Group showed before Tuesday's inflation report.
Traders anticipate that the Fed will take a brief pause in its interest rate increases before issuing another 25 per cent rise in July.
Minutes released from the Fed's meeting last month showed that policymakers “generally agreed” that continuing to raise interest rates “had become less certain”.
