Inflation Pressure in Check as Consumer Prices Edge Up 0.1%
WASHINGTON-- U.S. consumer prices ticked up in May as weak growth abroad and slow wage gains at home kept inflation pressures contained.</br></br>rose a seasonally adjusted 0.1% last month, the Labor Department said Tuesday, driven by higher rents, airfares and energy costs.</br></br>While the data suggest prices are stabilizing after two months of declines, even with May's small gain, consumer prices are up only 1.4% from a year earlier. The latest report showed that four years into the economic recovery, demand still remains too weak for firms to push prices higher and unemployment too high for workers to secure significantly higher wages.</br></br>"The economy is still running well below capacity and for that reason you're going to see inflation run on the soft side," said Michael Feroli, chief U.S. economist at J.P. Morgan Chase.</br></br>The moderate inflation readings should give the Federal Reserve latitude to proceed cautiously in reining in its bond-buying program in the coming months. Fed officials started a two-day meeting Tuesday where they're expected to discuss how to adjust their $85 billion-a-month in bond purchases. The purchases, coupled with near-zero interest rates, are designed to spur economic growth and boost job creation.