A steady rise in food and energy costs pushed overall US consumer prices up 0.7 per cent in May in what was the sharpest gain in more than 18 months, the Labor Department said today.
The gain in overall prices outstripped Wall Street economists' forecasts for a 0.6 per cent rise and was the largest since a 1.2 per cent jump in September 2005.
But more closely watched core prices increased only 0.1 per cent, lower than a forecast 0.2 per cent rise and down from 0.2 per cent in April.
The muted core price rise was likely to reassure financial markets that price gains remain tame, notwithstanding Federal Reserve officials' warning that they still see a danger from potential inflationary pressures.
"Although core inflation seems likely to moderate gradually over time, the risks to this forecast remain to the upside," Fed Chairman Ben Bernanke told a monetary policy conference last week.
The department said core prices have risen 2.1 per cent on a seasonally adjusted annual rate during the first five months this year, compared with a 2.6 per cent rise for all of 2006.
Energy prices climbed for a fourth straight month in May, rising 5.4 per cent after a 2.4 per cent April pickup. Gasoline prices soared 10.5 per cent in May, more than twice the 4.7 per cent increase posted in April.
Food prices were up 0.3 per cent last month following a 0.4 per cent gain in April. Food prices have risen at a 6.2 per cent annual rate so far in 2007, nearly three times the 2.1 per cent increase for all of 2006.