WASHINGTON (AP) — U.S. consumer prices increased in May by the largest amount in more than a year as the cost of food and gasoline showed big gains and airline fares jumped by the largest amount in 15 years.
The consumer price index rose 0.4 percent in May, the biggest one-month jump since a 0.6 percent increase in February 2013, the Labor Department reported Tuesday.
Over the past 12 months, consumer prices are up 2.1 percent. While that was the biggest 12-month price change since October 2012, it still left prices rising at a pace near the Federal Reserve's 2 percent target. But analysts said the May price jump, double what had been expected, would get the attention of Fed policymakers, who were starting a two-day meeting on Tuesday.
"The Fed will have to acknowledge in tomorrow's policy statement that price pressures are growing," said Paul Dales, senior U.S. economist at Capital Economics. "The chances that it will raise interest rates before the middle of next year are increasing."
"We're seeing more signs that the days of low inflation are behind us," said Jennifer Lee, senior economist at BMO Capital Markets. She said the drought in California pushed fruit prices up and a drought in Brazil was to blame for higher coffee prices.
Excluding volatile food and energy, core inflation was up 0.3 percent in May, the biggest one-month gain since August 2011. Over the past 12 months, core prices are up 2 percent.
The 0.4 percent May price rise reflected gains in a number of areas. Food costs were up 0.5 percent, the largest increase since a similar gain in August 2011. Food costs have been driven higher this year by an unusually harsh winter and a drought in California.
Energy costs were up 0.9 percent in May, the biggest one-month gain since December. Gasoline prices increased 0.7 percent last month.
Outside of food and energy, there were widespread price pressures as well. Airline tickets were up 5.8 percent in May, the biggest one-month gain since July 1999. The cost of clothing, prescription drugs and new cars all showed increases in May.
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