Racing US inflation bears out US Fed’s outlook for interest-rate hikes
Washington — In May, US inflation accelerated to its fastest pace in more than six years, reinforcing the Federal Reserve’s outlook for gradual interest-rate hikes while eroding wage gains that remain relatively tepid despite an 18-year low in unemployment. The consumer price index rose 0.2% from the previous month and 2.8% from a year earlier, matching estimates, a US labour department report showed on Tuesday. The annual gain was the biggest since February 2012 and follows a 2.5% increase in April. Excluding food and energy, the core gauge was up 0.2% from the prior month and 2.2% from May 2017, also matching the median estimates of economists. The pickup in headline inflation partly reflects gains in fuel prices, though the annual gain in the core measure — seen by officials as a better gauge of underlying inflation trends — was the most since February 2017. While the Fed is widely projected to raise borrowing costs this week for the sixth time in 18 months, the path of inflation...
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