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Updated: U.S. CPI Rises 0.4% In May

By Kitco News
Tuesday June 17, 2014 8:30 AM

Editor's Note: The article was updated to include comments from CIBC.

(Kitco News) - U.S. consumer prices ticked higher in May, according to the latest data from the Department of Labor.

On Tuesday, the Bureau of Labor Statistics said its consumer price index increased 0.4% on a seasonally adjusted basis in May, compared to April’s increase of 0.3%. According to consensus reports, economists expected the inflation barometer to rise 0.2%.

The report noted that May's increase was the largest since February 2013.

Looking at unadjusted year-over-year data, consumer price pressures last month rose to 2.1%, following April’s increase to 2.0%. The report pointed out that May's annual increase was the largest since October 2012.

"The indexes for shelter, electricity, food, airline fares, and gasoline were among those that contributed,” the report said.

Looking at the components of the index, the Labor Department said that the food index posted its largest increase since August 2011, rising 0.7% last month.

Stripping out the volatile food and energy costs, May core consumer prices increased 0.3%, compared to April’s increase of 0.2%. Economists expected inflation to rise between 0.1% and 0.2%. On an annual basis, core CPI rose to 2.0%, hitting the Fed’s target.

Andrew Grantham, senior economist at CIBC, said May’s inflation report could be the start of a trend in rising prices as the CPI data were “significantly stronger than anything seen in recent years.”

“With food prices continuing to rise and soft readings beginning to drop out from a year ago, headline CPI inflation could well reach 3% by year-end,” he said.

On Friday the Labor Department reported that its producer price index dropped 0.2% in May. However the drop in PPI came after a 0.6% rise in April and a 0.5% rise in March. Core PPI, which excludes food and energy costs, was unchanged in May.

By Neils Christensen of Kitco News; nchristensen@kitco.com



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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