WASHINGTON—An inflation index that is closely monitored by the Federal Reserve tumbled last month to its lowest level since April 2021, pulled down by lower gas prices and slower-rising food costs.
At the same time, consumers barely increased their spending last month, boosting it just 0.1 percent, after a solid 0.6 percent gain in April.
The inflation index showed that prices rose 3.8 percent in May from 12 months earlier, down sharply from a 4.4 percent year-over-year surge in April. And from April to May, prices ticked up just 0.1 percent.
Still, last month’s progress in easing overall inflation was tempered by an elevated reading of “core” prices, a category that excludes volatile food and energy costs. The increase underscored the Fed’s belief that it will need to keep raising interest rates to conquer high inflation….