U.S. consumer prices rose a moderate amount in May, driven up by rising energy costs and the biggest increase in shelter costs in more than nine years.
Consumer prices increased 0.2 percent last month following a 0.4 percent April increase, the Commerce Department reported Thursday. Energy prices rose for a third straight month, but food costs fell.
Core inflation, which excludes volatile food and energy, was also up 0.2 percent in May.
The Federal Reserve indicated Wednesday that it is still concerned about low inflation. The central bank left its key policy rate unchanged in a range of 0.25 percent to 0.5 percent. After moving the rate up by a quarter-point in December, the first rate hike in nearly a decade, the central bank has delayed any further increases because of concerns about tepid economic growth and inflation that is stuck at ultra-low levels.
Over the past 12 months, overall inflation has risen a modest 1 percent, reflecting in part the fact that energy prices are down 10.1 percent over that time period. Core inflation is up 2.2 percent over the past 12 months.
The Fed back in December had indicated it expected to raise rates four times this year. But it lowered that expectation to just two rate hikes in March. And this week, the Fed revealed that the number of Fed officials who believe there will be only one rate hike this year has risen from one to six.
Energy prices rose 1.2 percent in May, with gasoline prices up 2.3 percent. Even with the increase, gas pump prices are still 16.9 percent below where they were a year ago.
Food prices dropped 0.2 percent in May are up just 0.7 percent over the past year.
The rise in core inflation in May reflected a 0.4 percent increase in shelter costs, the biggest one-month gain since February 2007. Rents have been rising in recent months.
Hotel and motel costs were up 0.7 percent. The cost of medical care increased 0.3 percent in May, while clothing costs were up 0.8 percent.
In a separate report, the deficit in the nation's broadest measure of trade increased in the January-March quarter to the highest level in more than seven years.
The current account trade deficit jumped 9.9 percent in the first quarter to $124.7 billion, the Commerce Department reported Thursday. It was the biggest gap since a deficit of $152.5 billion in the fourth quarter of 2008, the height of the financial crisis.
The higher deficit reflected a $9.6 billion decline in the surplus on investment earnings. That offset a $2 billion decrease in the deficit on merchandise trade and an increase of $400 million in the surplus on services.
The current account is the broadest measure of trade because it covers not only trade in goods but also services and investment flows. Economists closely watch the figure because it indicates how much the United States needs to borrow from foreigners.
The first quarter deficit represented 2.7 percent of overall economic output, as measured by the gross domestic product, up from 2.5 percent in the fourth quarter when the deficit totaled $113.4 billion.
For all of 2015, the current account deficit totaled $462.97 billion, an increase of 18.1 percent from 2014.
The rising trade deficits have become a debating point in the presidential election. Presumptive Republican nominee Donald Trump has attacked what he views as defective trade agreements negotiated by past administrations and weak enforcement of U.S. trade laws. Trump contends that has allowed countries such as China to take advantage of American companies and workers.
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