US Consumer Prices Down 0.1% in May

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Economists had forecast the annual rate to remain unchanged at 2.7 percent.

The short-term rate can have a big effect on the cost of borrowing.

Core CPI increased at annualized rate of 1.7% last month, slowing from 1.9% in the preceding month.

There were 1.53 million unemployed people in the three months to April and 31.95 million people in work, again with the 74.8% employment rate standing at the joint highest level since comparable records began in 1971.

Another big push on prices came from computer games and equipment, which are typically imported and therefore reflect the diminished buying power of sterling since the Brexit vote.

United Kingdom inflation surged to the fastest pace in almost five years last month, according to data published Tuesday, as the pound's post-Brexit vote collapse continues to drive import prices higher. May's decline was the largest since January 2016 and confounded economists' expectations for a 0.1 per cent gain. Growth slowed to 0.2 percent in the first quarter, partly because of weaker consumer spending, and the UK National Institute of Economic and Social Research estimates it has not picked up so far this quarter.

Labor markets in the US continue to be solid, while communications from FOMC members have been clear that they continue to be focused on a tightening policy path.

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Nick Dixon, Investment Director at Aegon, commented: "For the fourth month in a row inflation has exceeded the Bank of England's 2% target". Food prices rose for a fifth straight month.

The Federal Reserve was expected to boost a key interest rate later Wednesday. This left finance ministry fuming as it felt that inflation was consistently low warranting a rate cut.

This is a 0.2% increase on April's figure, with the falling cost of motor fuels failing to offset the rising cost of food, energy and recreational goods.

Bryant said the BoE's interest rate setters might choose to use a policy statement on Thursday to remind investors that they could move sooner to raise borrowing costs than the 2019 date that economists are mostly expecting. Sales at electronics and appliance stores plunged 2.8 percent, the largest drop since March 2010.

A separate Labor Department report showed average weekly earnings for private-sector workers, adjusted for inflation, increased 0.3% in May from the prior month.

While vegetable prices in May fell by 13.44 percent as compared with previous year, pulses recorded a sharper drop of 19.44 percent.

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