But the report released Wednesday by the U.S. Department of Labor may not change Fed officials'view that there is a temporary factor behind the weak inflation data. One of the temporary factors mentioned by Federal Reserve Chairman Powell is the rebound in air fares and the stabilization of clothing prices after two consecutive months of decline.
Federal Reserve policymakers are scheduled to meet on June 18-19, but the current intensification of trade tensions, slowing economic growth and a sharp decline in employment growth in May have led financial markets to expect at least two interest rate cuts by the end of 2019. But it is not expected to cut interest rates next Wednesday.
"The background of weak inflation reinforces our expectations of two interest rate cuts later this year." Michael Feroli, an analyst at J.P. Morgan Chase in New York, said: "We think it may be too early to take action next week, given that the economy is still growing and trade-related risks remain twofold."
The government announced that the consumer price index rose 0.1% last month as the rebound in food prices was offset by a drop in gasoline prices. CPI rose 0.3% in April.
CPI grew by 1.8% in the 12 months to May, down from 1.9% in April. CPI growth in May was in line with economists'expectations.
Excluding volatile food and energy, the core CPI rose 0.1% for the fourth consecutive month, the longest sustained momentum since April 2017. The so-called core CPI has been hampered by a sharp fall in the insurance prices of used cars, trucks and motor vehicles.
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