U.S. Inflation up -- Barely

U.S. consumer prices barely rose last month, pointing to moderate inflation stateside that together with a slowing economy could increase pressure on the Federal Reserve to cut interest rates this year.

May's report from the U.S. Labor Department on Wednesday, however, showed some pockets of inflation, with rents and health-care costs rising solidly, which could buy the U.S. central bank some time before easing monetary policy.

Fed policymakers are scheduled to meet next week as trade tensions continue to rise, slowing growth and a sharp step-down in hiring in May that has led financial markets to price in at least two interest rate cuts by the end of 2019.

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." A rate cut is not expected next Wednesday.

The government in Washington said its consumer price index edged up 0.1% last month as a rebound in the cost of food was offset by cheaper gasoline. The CPI gained 0.3% in April.

In the 12 months through May, the CPI increased 1.8%, slowing from April’s 1.9% gain. Economists had forecast the CPI would rise 0.1% in May and 1.9% year-on-year.

Excluding the volatile food and energy components, the CPI nudged up 0.1% for the fourth straight month. The so-called core CPI was held down by a sharp decline in the prices of used cars and trucks as well as motor vehicle insurance.

In the 12 months through May, the so-called core CPI rose 2.0% after advancing 2.1% in April.