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U.S. Consumer Prices Rose to a Record High of 2.8 Percent Over Six Years


June, 13 2018
watermark Economic news

The consumer price of the U.S. increased slightly in May despite the slower growth of gasoline costs, implying moderate inflation in the economy.

The inflation report of the Labor Department was released prior to the two-day policy meeting on Tuesday. With the steady growth of inflation and anticipated tightening of the labor market, the Federal Reserve is motivated to raise interest rates for the second time this year on Wednesday.

The CPI data rise by 0.2 percent in the previous month while the cost of food remains the same. A similar increase of CPI was seen in April. After a year in May, the CPI gained 2.8 percent, which has been the biggest growth since February 2012, following its increase of 2.5 percent in April.

Gaining 0.2 percent of the CPI, excluding volatile food and energy components, was due to the rebound of new motor vehicle prices and a pickup in the cost of health care, after rising to 0.1 percent in April. In turn, this raised the year-on-year gain of the core CPI by 2.2 percent from 2.1 percent in April. It was the largest growth since February last year.

After the weak reading last week, the annual inflation measures are adjusting higher. Both the CPI and core CPI growth in the previous month met the expectations of economists.

The Federal Reserve moves on a different inflation measure which is just lower than the two percent target. Economists have different perspectives on whether policymakers will implement more rate hikes in the statement following the rate decision on Wednesday.

Meanwhile, the dollar is moving steadily against a basket of currency which is immediately after the data fell slightly than the U.S. Treasury yields, which is trading lower compared a slightly higher U.S. stock index futures.


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