Consumer Prices Rise Slightly In May

Whatever pressure may be building in import & export prices or even producer prices, it has yet to give much of a boost to consumer prices which rose only 0.2 percent in May. Core prices, that is prices excluding food and energy, also came in at plus 0.2 percent.

Year-on-year rates aren't going anywhere, at only plus 1.0 percent for total prices and plus 2.2 percent core prices. Though the 2.2 percent rate does exceed the Fed's 2 percent target, core consumer prices are not what the Fed tracks most closely, rather core PCE prices which typically run 1/2 point lower.

It's the trend that counts most and the trends for consumer prices are still flat, not yet reflecting the recovery in oil prices. This report does not lift the chances for a rate hike at the July FOMC.

Recent History Of This Indicator:
Gasoline prices climbed sharply in May but they aren't expected to inflate the consumer price index where the Econoday consensus is calling for only a moderate gain of 0.3 percent. Excluding energy and also food, the core rate is expected to show even less pressure, at a consensus plus 0.2 percent. Weakness in the core rate would underscore the persistently weak inflation picture and could further push back the outlook for the Federal Reserve's next rate hike.