US: CPI inflation accelerates to 4.2% in May on high energy prices

New York [US], June 10, (ANI): The US consumer inflation rose 4.2 per cent annually in May as higher energy prices led to the CPI index increasing at its fastest pace in three years. The CPI had advanced 3.8 per cent year-on-year in April. On a monthly basis, prices were up 0.5% in May after climbing 0.6% in April.
The core CPI rose 2.9 per cent year-on-year in May after increasing 2.8 per cent in April. The so-called core CPI gained 0.2 per cent on a monthly basis after rising 0.4 per cent in April. Core CPI measures inflation pressure excluding volatile food and energy prices.
The energy index increased 23.5 per cent for the 12 months ending May. The food index increased 3.1 per cent over the last year, according to the data released by the Labour Department's Bureau of Labour Statistics.
The third straight month of price rise will make newly-appointed US Federal Reserve chairman Kevin Warsh's task difficult as he heads into his maiden policy meeting on June 16-17.
Experts have already pared bets of a cut this year after May's strong jobs report. With inflation coming in hot in May, an interest rate hike for this year cannot be ruled out. The US Federal Reserve tracks the Personal Consumption Expenditures Price Index, which is also running above the target of 2 per cent.
Higher energy prices are reflected in soaring pump prices for US households who are grappling with strained income and rising prices. The US consumer sentiment fell to a record low in May as consumers started dipping into their savings to meet their household expenditure.
The higher inflation print is a worry for US President Donald Trump, who is seeking to retain control of Congress in the mid-term elections.
The prolonged closure of the critical Strait of Hormuz doesn't augur well for the inflation trajectory, even as hopes fade of a durable peace deal between the US and Iran.
Tension ratcheted up in the region after the US and the Iranian regime exchanged a fresh round of strikes. The US targeted military bases in Iran along the Strait of Hormuz after Iran downed an American Apache helicopter. (ANI)