US consumer inflation continued to cool last month, according to US government data published Wednesday, giving the Federal Reserve some positive news shortly before it announced its decision to hold interest rates at a 23-year high.
The annual consumer price index (CPI) came in at 3.3% in May, down 0.1 percentage point from April, the Labor Department said in a statement. This was slightly lower than the median forecast of economists surveyed by Dow Jones Newswires and The Wall Street Journal.
The monthly inflation rate was unchanged from a month earlier, below expectations of a 0.3% rise. Much of the easing of inflation came from a sharp drop in the index for gasoline, which fell by 3.6% from a month earlier, while shelter prices rose by 0.4%.
A widely-watched inflation measure excluding volatile food and energy prices also eased last month, rising at an annual rate of 3.4%, and by 0.2% from a month earlier, according to the Labor Department.
Wednesday's data failed to sway the Federal Reserve's plans to leave its key lending rate unchanged later on Wednesday. However, it bodes well for the prospect of interest rate cuts this year, and could push some Fed policymakers to pencil in two rate cuts this year instead of one, as some analysts had feared.
"The question of whether it's sufficiently restrictive is going to be one we know over time," Fed chair Jerome Powell said. "But I think for the reasons I talked about at the last press conference and other places, I think the evidence is pretty clear that policy is restrictive and is having, you know, the effects that we would hope for."
The data also supports President Joe Biden administration's messaging that the US economy has turned a corner ahead of November's presidential election, which is expected to pit Biden against Republican candidate Donald Trump.
