US core consumer prices edge higher in May

The cost of living in the US declined unexpectedly in May, but 'core' measures of prices gained further ground and looked set to continue to accelerate over coming months, belying worries of a weak US economy.

The consumer price index advanced by 0.2% month-on-month, according to the Bureau of Labor Statistics.

That was one-tenth of a percentage point less than economists had anticipated.

In comparison with a year ago, the CPI was left standing 1% higher (consensus: 1.1%), down from the 1.1% clip observed over the previous month.

Prices for used cars and trucks dropped by 1.3% in comparison with the month before, alongside a 0.2% drop in food prices.

Gasoline prices, on the other hand, increased by 2.3% over the month.

However, so-called 'core' consumer prices, which strip out the price variations in volatile categories such as food and energy, increased by 0.2% over the month, pushing the year-on-year rate from 2.1% to 2.2%, as expected.

Large month-on-month increases were also seen in the prices of other 'core' components such as shelter (0.4%) and medical care services (0.5%).

"Solid core; underlying trend is rising, slowly. The headline y/y rate dipped a tenth to 1.0%, but over the second half of the year it will be lifted by base effects, and should reach 1.8% by December, with the core at 2.5%," Ian Shepherdson, chief economist at Pantheon Macroeconomics said in a research note sent to clients.