US inflation cooled in May in sign that price pressures may be easing

WASHINGTON — (AP) — Inflation in the United States eased last month in a hopeful sign that a pickup in prices that occurred early this year may have passed. The trend, if it holds, could move the Federal Reserve closer to cutting its benchmark interest rate from its 23-year peak.

Consumer prices excluding volatile food and energy costs — the closely watched “core” index — rose 0.2% from April to May, the government said Wednesday. That was down from 0.3% the previous month and was the smallest increase since October. Measured from a year earlier, core prices rose 3.4%, below last month’s 3.6% increase.

Fed officials are scrutinizing each month’s inflation data to assess their progress in their fight against rising prices. Even as overall inflation moderates, such necessities as groceries, rent and health care are much pricier than they were three years ago — a continuing source of public discontent and a political threat to President Joe Biden’s re-election bid. Most other measures suggest that the economy is healthy: Unemployment remains low, hiring is robust and consumers are traveling, eating out and spending on entertainment.

The Fed has kept its key rate unchanged for nearly a year after having rapidly raised it in 2022 and 2023 to fight the worst bout of inflation in four decades. Those higher rates have led, in turn, to more expensive mortgages, auto loans, credit cards and other forms of consumer and business borrowing. Though inflation is now far below its peak of 9.1% in mid-2022, it remains above the Fed’s target level.