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US inflation rate continues to fall US inflation rate continues to fall
(32 minutes later)
Prices for eggs, used cars and furniture in the US dropped in May, helping to slash inflation to less than half of its peak a year ago. Prices for eggs, petrol and furniture in the US dropped in May, helping to slash inflation to less than half of its peak a year ago.
Inflation, the rate at which prices rise, was 4% over the 12 months to the end of May, the Labor Department said. That was down from 4.9% in April. Inflation, the rate at which prices rise, was 4% over the 12 months to the end of May, the Labor Department said.
The update comes as the US central bank meets to debate whether it should raise interest rates again. That was down from 4.9% in April and marked the eleventh month in a row that price increases have eased.
Officials have already raised borrowing costs sharply to rein in prices. The update comes as the US central bank meets to debate whether it needs to do more to fight inflation.
Analysts expect the bank to keep interest rates unchanged this month, but it could signal a willingness to keep raising rates in the future. Officials have raised borrowing costs sharply since last year to try to rein in prices, wrenching the Federal Reserve's key interest rate to more than 5%, from near zero in March 2022.
Analysts say the Federal Reserve is likely to leave interest rates unchanged this month, reflecting the progress made to ease price pressures as higher borrowing costs cool borrowing and spending.
But the update also showed that prices in many parts of the economy are still rising steadily - and far faster than the 2% rate the Fed considers healthy.
Measures of housing costs, including rents, in particular continue to climb sharply.
There have also been steep price rises for women's clothing, beer and services from car maintenance to school fees.
"Don't be fooled by the sharp fall in headline inflation, which is nearly all explained by falls in gasoline prices. These numbers show underlying inflationary pressures are still stubbornly high," said Brian Coulton, chief economist at Fitch.
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