June 17, 2009

Consumer prices ease deflation fears

The Consumer Price Index rose 0.1 percent in May keeping fears of deflation at bay for another month, the U.S. Department of Labor said Tuesday.

Core prices, which exclude food and energy costs, also rose 0.1 percent, in line with expectations.

Economists had expected a sharper rise in the energy and food inclusive CPI index, predicting a gain of 0.3 percent. But the standout figure is the 1.3 percent drop in prices over the past 12 months, the largest annual drop since 1950, the department said.

Energy costs provided the lion's share of the decrease, falling 27.3 percent from a year ago.

Food prices in the past 12 months have risen 2.7 percent.

Overlooking food and energy, prices rose 1.8 percent since May 2008.

In May, transportation costs rose 0.8 percent, while medical costs rose 0.3 percent. Energy prices also rose in the month, climbing 0.2 percent over April.