The US seasonally adjusted consumer price index, a measure of inflation, rose by 0.5% in May, as expected, following a 0.6% increase in April, according to data released Wednesday by the Bureau of Labor Statistics.
Core CPI, which excludes food and energy prices, rose by 0.2%, below the consensus estimate for a 0.3% increase. Core CPI rose by 0.4% in April.
Food prices increased by 0.2%, while energy prices were up 3.9%. Gasoline prices surged by 7.0%.
Owners' equivalent rents increased by 0.3%, while regular rents were up by 0.4%. There were also notable gains in apparel, hospital services and airfares, but prices of new vehicles declined by 0.3% after a 0.2% drop in the previous month and used vehicle prices rose by 0.1% after a flat reading.
CPI excluding food, energy and shelter rose by 0.1% after a 0.2% increase in the previous month.
The year-over-year rates for overall and core CPI increased to 4.2% and 2.9%, respectively, from 3.8% and 2.8% in the previous month.
The monthly consumer price index, or CPI, reported by the Bureau of Labor Statistics, measures the index level of prices paid by consumers for a basket of goods and services such as food, energy, vehicle, medical care, apparel, and housing.
The core measure, which excludes food and energy due to their volatility, is closely watched by markets and the Federal Reserve as a sign of underlying inflation pressures.
Rising inflation is a sign of strong US consumer demand, but both stocks and bond normally react negatively to level of price growth that would necessitate higher interest rates.