A hot inflation reading for May released Wednesday morning reinforces that the Federal Reserve will maintain interest rates next week.
The rates will likely remain on hold until there’s evidence that inflation is receding
The Consumer Price Index rose 4.2% in May, in line with expectations, compared with 3.8% in April. The rise was again driven mostly by energy prices due to the conflict in the Middle East, which accounted for 60% of the rise in inflation. Food and shelter prices also pushed up inflation last month.
Stripping out volatile energy and food prices, “core” inflation ticked up to 2.9% from 2.8% in April, also in line with expectations. Month over month, core inflation rose 0.2%, below expectations for 0.3% and down from 0.4% in April. While the month-over-month core number showed a deceleration from April, economists largely expected that, because it reflects a retracement in shelter inflation after a one-time adjustment to the shelter index.