The inflation rate in the US fell more than expected in May, according to new data from the Bureau of Labor Statistics.
Consumer prices rose 4% last month compared to a year ago, down from 4.2% in April, which was the highest rate since 2008.
The drop in inflation was mainly driven by lower prices for used cars and trucks, which surged in April but declined in May. Other categories that saw price declines included airfares, car insurance and apparel.
Core inflation, which excludes food and energy costs, also fell from 3% in April to 2.7% in May.
The data suggests that inflation may be transitory, as the Federal Reserve has argued, and not a persistent threat to the economy. The Fed has maintained its accommodative monetary policy despite rising inflation pressures, saying that they are largely due to temporary factors such as supply chain disruptions and pent-up demand from the pandemic.
However, some economists and investors have warned that inflation could become more entrenched and force the Fed to raise interest rates sooner than expected, which could slow down the economic recovery.
The inflation data for May comes a day before the Fed’s policy meeting, where it is expected to discuss its outlook for the economy and inflation.
