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U.S. consumer prices rose marginally in May amid a slowdown in the pace of increases in the cost of gasoline, pointing to moderate inflation pressures.

The Labor Department said on Tuesday its Consumer Price Index increased 0.2 per cent also as food prices were unchanged. That followed a similar gain in the CPI in April. In the 12 months through May, the CPI increased 2.8 per cent, the biggest advance since February 2012, after rising 2.5 per cent in April.

Excluding the volatile food and energy components, the CPI rose 0.2 per cent, supported by a rebound in new motor vehicle prices and a pickup in the cost of health care, after edging up 0.1 per cent in April. That lifted the year-on-year increase in the so-called core CPI to 2.2 per cent, the largest rise since February 2017, from 2.1 per cent in April.

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Annual inflation measures are rising as last year’s weak readings fall from the calculation. Economists had forecast both the CPI and core CPI rising 0.2 per cent in May.

The inflation data was published ahead of the start of the Federal Reserve’s two-day policy meeting on Tuesday. The U.S. central bank tracks a different inflation measure, which is just below its 2 per cent target.

The Fed is expected to raise interest rates for a second time this year on Wednesday. Economists are divided on whether policy-makers will signal one or two more rate hikes in their statement accompanying the rate decision.

The Fed’s preferred inflation measure, the personal consumption expenditures price index excluding food and energy rose 1.8 per cent on a year-on-year basis in April, matching March’s increase.

Economists expect the core PCE price index will breach its 2 per cent target this year. Fed officials have indicated they would not be too concerned with inflation overshooting the target.

Last month, gasoline prices increased 1.7 per cent after surging 3.0 per cent in April. Food prices were unchanged in May after rising 0.3 per cent in the prior month. Food consumed at home fell 0.2 per cent.

Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, rose 0.3 per cent last month after increasing 0.3 per cent in April. Tenants’ rent increased 0.3 per cent after shooting up 0.4 per cent in April.

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Healthcare costs gained 0.2 per cent after nudging up 0.1 per cent in April. Prices for new motor vehicles rose 0.3 per cent after sliding 0.5 per cent in April.

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