May's Inflation Report Doesn't Hold Any Surprises

US inflation picked up a bit last month as food costs rose, though overall inflation remained mostly tame. Consumer prices increased 2.4% in May compared with a year ago, according to a Labor Department report released Wednesday. The AP reports that's slightly below the 2.5% that economists were expecting, though in line with the 2.4% the economists the Wall Street Journal spoke with were anticipating. The figure is up from a 2.3% yearly increase in April. Excluding the volatile food and energy categories, core prices rose 2.8% for the third straight month. Economists pay close attention to core prices because they generally provide a better sense of where inflation is headed.

• In the AP's view, inflation remains stubbornly above the Federal Reserve's 2% target, which makes it less likely that the central bank will cut its key short-term interest rate. Trump has repeatedly urged the central bank to reduce borrowing costs.
• Last week, the Labor Department's Bureau of Labor Statistics, which compiles the inflation data, said it is reducing the amount of data it collects for each inflation report. Economists have expressed concern about the cutback, and while it isn't clear how sharp the reduction is, most analysts say it is likely to have a minor impact. Still, any reduction in data collection could make the figures more volatile.

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