US inflation remained well below the Federal Reserve's 2 per cent annual target in May.
The personal consumption expenditures price index, which is the Fed's preferred inflation gauge, rose 0.2 per cent last month from a year earlier, the Commerce Department said on Thursday. That was unchanged from April's revised annual reading and down from 0.3 per cent annual growth in March.
Price gains have undershot the Fed's goal for 37 straight months, the longest stretch of sub-2 per cent inflation since the first half of the 1960s.
Excluding the volatile categories of food and energy, prices rose 1.2 per cent in May from a year earlier, slipping from revised annual gains of 1.3 per cent in April and 1.4 per cent in March. Core inflation in May posted its smallest annual growth since February 2014.
Overall prices rose 0.3 per cent in May from the prior month, and so-called core prices ticked up 0.1 per cent from April.
Two other broad gauges of US prices jumped in May. The Labor Department's closely watched consumer-price index posted its largest one-month gain in more than two years and the agency's producer-price index saw its sharpest increase in nearly three years.
Still, annual inflation remained subdued in both reports. The consumer-price index was unchanged in May from a year earlier, and producer prices fell 1.1 per cent on the year.
Monroe, Mich.-based furniture company La-Z Boy Inc. isn't feeling much pinch from rising prices right now. "Last year we did have raw material price pressures and we took some price increases to cover that," Chief Executive Kurt Darrow told analysts last week. "This year, as we look out sitting here today, we don't see much of that on the horizon and we haven't done anything pricing-wise to mitigate that."
The Fed has said it will raise its benchmark short-term interest rate, which has been pinned near zero since December 2008, when the labor market has improved further and officials are "reasonably confident" that inflation will soon move back to 2 per cent.
The plunge in oil prices since mid-2014 has dragged down overall inflation, while the strong dollar has made imports into the US cheaper. Fed Chairwoman Janet Yellen last week noted that "energy prices appear to have stabilised recently." But she also said non-oil import prices have continued to fall, "and I think that's serving to push down core inflation a little bit. Eventually I expect that impact to ebb, but it is a factor affecting the outlook."
