(CN) – Mirroring the barely noticeable uptick in wholesale prices last month, U.S. consumer prices rose only 0.1% in May in another sign of low inflation.
The drop from the 0.3% increase in consumer prices seen in April can be attributed to lower costs for gasoline and electricity, according to a Labor Department report released Wednesday.
The consumer price index, which measures what Americans pay for a wide range of products, is up 1.8% from a year ago.
Just like the modest increase in wholesale prices, last month’s 12-month rise in consumer prices is just below the Federal Reserve’s 2% annual inflation target.
Fed Chairman Jerome Powell has said the central bank can be patient with raising interest rates this year while inflation pressures remain tame, but some have called for a cut to interest rates to boost economic growth – including President Donald Trump.
The economy added a disappointingly low 75,000 new jobs in May. The gross domestic product, a primary indicator of economic health, grew at a 3.1% rate in the first quarter of this year, but economists predict it will slow to 2% or lower for the April-June quarter as effects from the 2017 tax cuts fade.
While Fed policymakers are set to meet next week, a rate cut is not expected so soon. However, some investors say the central bank could cut rates at its July meeting.
Excluding the always volatile food and energy sectors, core consumer prices also increased just 0.1% in May and are up 2% from this time last year.
Gas prices dropped 0.5% last month, while electricity costs fell by 0.8%. Meanwhile, rent and health care costs rose by 0.2% and 0.3%, respectively.