This latest report anticipates the Federal Reserve's Federal Open Market meeting this week. How will it impact the Fed's stimulus policy?
The Consumer Price Index, the most widely-used measure of inflation, rose only 0.1 percent in May, the Department of Labor reported Tuesday.
Over the past 12 months, the all items index—the prices of all goods and services measured by the Consumer Price Index-- increased 1.4 percent before seasonal adjustment.
The index for all items less the more volatile food and energy increased 0.2 percent in May after rising 0.1 percent in both March and April. It rose 1.7 percent over the last 12 months.
The shelter index rose 0.3 percent, its largest increase since July 2011, and accounted for more than half of the seasonally adjusted all items increase in May. The rent index rose 0.3 percent, while the index for lodging away from home rose 1.2 percent, its fifth consecutive increase.
Gasoline prices were flat, but increases in electricity and natural gas indexes fueled a rise in the energy index. These were offset by a downturn in food prices, particularly the food at home index, which fell 0.3 percent.
There were also increases in airline fares, which rose 2.2 percent after declining in April. Indices for recreation and clothing both rose 0.2 percent in May, but the indexes for medical costs and used cars and trucks declined.
The monthly CPI reflects consumer spending trends of U.S. urban consumers, who represent about 87 percent of the population.
In addition to being used as a measure of inflation, the CPI is also sometimes viewed as an indicator of the effectiveness of government economic policy, according to the DOL website: ”It provides information about price changes in the nation's economy to government, business, labor, and private citizens and is used by them as a guide to making economic decisions.”
This latest report anticipates the Federal Reserve’s Federal Open Market Meeting this week, at which Chairman Ben Bernanke is expected to further clarify remarks he made in May before the Joint Economic Committee in Congress that the Fed would consider tapering its bond-buying program if the economy, and in particular the job market, was showing signs of improvement. Since those remarks, the Dow Jones industrial average has dropped by about 1 percent.
Bernanke is expected to reassure investors that the Fed will not retreat on the stimulus until it is sure the economy is strong enough.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.