WASHINGTON — The cost of living excluding food and fuel rose less than forecast in May, a sign inflation may take time to meet the Federal Reserve’s goal.
The so-called core measure increased 0.1 percent, the smallest gain this year, after climbing 0.3 percent in April, Labor Department figures showed Thursday in Washington. The median forecast of 82 economists surveyed by Bloomberg called for a 0.2 percent rise. The overall consumer-price index advanced 0.4 percent, as fuel costs rebounded.
Declining costs for used cars and trucks, clothing and hotel stays combined with a deceleration in health care expenses held back the core index, swamping advances in rents. Fed policymakers, who ended a meeting Wednesday to assess when to begin raising interest rates, reiterated they see price gains gradually progressing toward their target.
“Inflation is way below where the Fed is hoping it’ll end up,” said Nariman Behravesh, chief economist for IHS Inc. in Lexington, Mass., who predicted the core CPI would rise 0.1 percent. “The pace of interest rate hikes is going to be very, very slow.”
Overall consumer prices were little changed in the 12 months ended in May, after a 0.2 percent year-over-year decline the prior month.
The core CPI measure increased 1.7 percent from May 2014.
