Rising gas prices dragged inflation out of negative territory for the year ending in May, the Bureau of Labor Statistics reported Thursday.
Overall consumer prices were unchanged year-over-year in May, after being down three of the past four months in the wake of collapsing energy prices.
The less-volatile measure of core inflation, however, which strips out energy and food prices, was down slightly in the year through May, from 1.8 percent to 1.7 percent.
Core inflation is generally more indicative of future price movements than the overall Consumer Price Index.
The Federal Reserve has tied its decision to raise interest rates and tighten monetary policy to inflation rising toward its 2 percent target. Thursday’s inflation numbers suggest that the temporary effects of falling energy prices are beginning to reverse themselves, but the core inflation measure is headed in the wrong direction.
“The big declines in energy prices came toward the end of last year and the beginning of this year, and they’re not going to wash out of the inflation data until late in this year,” Federal Reserve Chairwoman Janet Yellen said at a press conference Wednesday. “But the fact that energy prices have stabilized means that the pressure from that source is diminishing.”
The gasoline index was up over 10 percent in May, according to the Bureau of Labor Statistics, driving most of the overall month-to-month increase in prices.
That increase only slightly undoes the massive recent decrease in energy prices that has caused U.S. inflation to drop and boosted the purchasing power of U.S. consumers.
Over the past year, gas prices are still down a quarter and overall energy prices are down 16 percent, according to Thursday’s release.
