US consumer prices slipped 0.1 per cent in May

US consumer prices slipped 0.1 per cent in May”

Falling gasoline prices drove USA consumer prices lower in May, another sign that inflation remains tepid, the Labor Department reported Wednesday.

The consumer price index in May 2017 was 99.7% compared to April 2017, i.e. monthly inflation was minus 0.3%, the National Statistics Institute (NSI) said.

The impact of the drop in the pound dating back to last year's vote to leave the European Union has made itself felt through higher costs to go on holiday outside Britain and for imported computers, computer games and equipment that all helped push consumer prices up 2.9% compared to May of 2016. And the biggest price rises in four years won't provide any comfort. This is due to an increase in employment in academies and the NHS, which are both counted within the central government total.

United Kingdom inflation resumed its upward march last month, accelerating more than forecast to the fastest pace in four years.

Year-over-year, consumer prices were 1.9% higher from the same month a year earlier, missing expectations for a gain of 2.0% and after rising 2.2% in the preceding month.

As it stands, the consensus view is that the Federal Reserve will raise interest rates today and then once more in 2017.

Given the reliance on the services sector in the United Kingdom, this also has profound implications for economic growth.

Ms. Yellen's assessment of the broader economy was largely upbeat, though separate data out Wednesday showed a slowdown in key components of consumer spending.

Economists had expected sales to increase slightly last month after rising 0.4 per cent in April.

"The gasoline pump drop was an artifact of crude prices softening", he wrote in a research note.

Defying Bank of England predictions, the United Kingdom inflation rate soared to nearly 3 percent in the wake of the Brexit-related fall in the value of sterling.

The Fed has a 2 per cent inflation target and tracks an inflation measure which is now at 1.5 per cent.

Ulster Bank economist Richard Ramsey warned inflationary pressure is likely to continue during the rest of this year.

Growth in prices charged by factories held steady at an annual 3.6 percent, in line with the Reuters poll.

The headline CPI for the 12-months through May fell below the Fed's two percent target to 1.9 percent last month, continuing a steady decline since February.

There were 1.53 million unemployed people in the three months to April and 31.95 million people in work, again with the 74.8% employment rate standing at the joint highest level since comparable records began in 1971.

The May number is significant for a couple of reasons: 1) the consensus estimate was for 0.0% inflation, so this is a downside miss, and 2) 12-month inflation has now dipped below 2.0% for the first time in six months.

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