US Inflation Undershoots Fed’s 2% Target for 37th Consecutive Month

U.S. prices jumped in May, but subdued inflation continues to present a potential complication for the Federal Reserve as it inches toward raising short-term interest rates.

The personal consumption expenditures price index, which is the Fed’s preferred inflation gauge, rose a seasonally adjusted 0.3% from April, the Commerce Department said Thursday. It was the biggest rise in more than two years and largely reflected increased prices for energy, including gasoline. Food prices were flat, and prices excluding food and energy ticked up 0.1%.

Still, for the 37th consecutive month, annual inflation undershot the central bank’s 2% target. Prices rose just 0.2% in May from a year earlier, unchanged from April, and growth in core prices slipped to 1.2% in May from 1.3% the prior month.

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