USA consumer inflation slows in May on cheap energy, used cars

Marco Green
June 12, 2019

"The Euro and other currencies are devalued against the dollar, putting the a big disadvantage", Trump tweeted on Tuesday without offering any evidence.

The Fed faces pressure to cut a key short-term rate as there are signs of slowing economic growth.

Fed Chairman Jerome Powell said last week that the central bank was closely monitoring the implications of the trade war on the economy and would "act as appropriate to sustain the expansion".

But prices for airline tickets, household furnishings and new vehicles rose last month. Rent of primary residence rose 0.2%.Food costs rose 0.3% from the prior month after a decline in the prior period; Expenses for medical care commodities were down 0.4%.Economists surveyed by Bloomberg had forecast the core gauge would rise 0.2% from the prior month and 2.1% from a year earlier, with corresponding gains of 0.1% and 1.9% projected for the broader index. Excluding the volatile food and energy categories, wholesale prices rose 0.2% in May from April and 2.3% from May 2018.

Compared to May of a year ago, the core CPI is two percent higher, slowing slightly from the 2.1 percent pace of a month earlier.

Although eurozone countries share a currency, and thus don't have a national exchange rate, the U.S. Treasury has placed a number of European countries on a watch list for practices the U.S. says are close to currency manipulation, giving their economies an unfair advantage.

When other countries' currencies fall relative to the USA dollar, their goods become cheaper in the US market while dollars go further when Americans travel, though US goods become more expensive overseas.

Meanwhile on Tuesday President Trump tweeted that the euro is devalued against the dollar and blasted the Federal Reserve for their monetary policy.

Shelter prices - the largest component of the index - increased 0.2% in May, after notching gains of 0.4% in the previous two months. The inflation data is released first on Wednesday at 12:30 GMT, followed by the retail sales report on Friday, at the same time. The core PCE price index has been running below the Fed's 2 per cent target this year.

Gasoline prices fell 0.5 per cent in May after rising 5.7 per cent in April. Weaker energy and food prices, however, partially offset the increase in prices of services last month. And unlike last month, Fed officials haven't explicitly pushed back against the market pricing in expected cuts.

United States housing costs have been rising steadily as rents have increased 3.7% in the latest 12 months, while the equivalent costs for homeowners in up 3.3%, according to the data.

Healthcare costs increased 0.3%, matching April's rise.

The Labor Department said on Wednesday its consumer price index edged up 0.1% last month.

Wholesale food prices fell 0.3 percent in May.

Apparel prices were unchanged after two steep declines.

Other reports by Click Lancashire

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