Although energy costs increased 2.4% last month, the advance was less than April's and as a result the Labor Department's Consumer Price Index (CPI) moderated a bit. The CPI rose four-tenths of a percent last month, right in line with economists' expectations. May's increase was two-tenths of a percentage point below April's six-tenths increase and matched March's four-tenths advance.
During the 12 months ending in May, the CPI increased 4.2%.
The closely watched core CPI, which does not include price changes for food and fuel, rose three-tenths of a percentage point in May, the same as in March and April. For the 12 months ending in May, the core CPI has increased 2.4%. That's probably high enough to help trigger another 25-basis-point increase in the federal funds target rate when the inflation-wary Federal Open Market Committee meets at month's end. The target rate, now 5%, would rise to 5.25%.