WASHINGTON (6/19/15)--Inflation received a bit of a nudge in May, as consumer prices climbed by 0.4%, marking the largest month-over-month gain since early 2013 (Economy.com June 18).
Stronger energy prices aided the increase in the Consumer Price Index (CPI), jumping 4.3% during the month after a 1.3% decline in April, while food prices were unchanged for the second straight month.
Core prices, which exclude food and energy, increased 0.1% after April’s 0.3% rise.
“The core CPI was softer than we expected, and there could be some possible policy implications,” said Ryan Sweet, Moody’s analyst (Economy.com). “The Federal Reserve’s latest interest rate projections showed more officials moved into the one rate-hike camp this year. If we continue to get tepid gains in core inflation, similar to May, then it would strengthen the case to raise rates only once this year.”
For now, it appears the majority of the Federal Open Market Committee wants to raise interest rates twice in 2015, according to the Federal Reserve’s dot plot, released Wednesday alongside its policy statement.
On an annualized basis for the three months ending in May, CPI gained 3.2%, a steep increase from April’s 2.2% climb, and the strongest acceleration since 2012.
May’s bolstered numbers are likely driven by the surge in energy prices, as gasoline prices rose 10.4%, while fuel oil prices increased 0.7% during the month.