US annual inflation slows to lowest level since March 2021
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The consumer price index (CPI) in the US rose by 0.1% in May, compared with a 0.4% increase in April. In annual terms, inflation slowed to 4% from 4.9% a month earlier, which was the lowest level since March 2021. reported US Federal Bureau of Labor Statistics.
Economists polled by Reuters expected annual inflation at 4.2%, and monthly – at around 0.2%.
Core inflation (excluding food and energy prices, Core CPI) slowed to 5.3% y/y from 5.5% a month earlier. In monthly terms, the increase for the third month in a row is 0.4%.
On May 3, the US Federal Reserve System (FRS) raised its base interest rate by 25 bp. up to 5-5.25% per annum. The agency noted a moderate increase in economic activity in the first quarter of 2023. The unemployment rate remains low, while inflation is still elevated, the US Federal Reserve said. The last time the US Federal Reserve raised the rate to 4.75-5% per annum at the end of March. According to the agency’s median forecasts, by the end of 2023 the rate will be 5.1%, by the end of 2024 – 4.3%, and by the end of 2025 – 3.1%.
The inflation target in the US is 2%. In March, inflation slowed to 5% in annual terms, core inflation was 5.6%. US GDP in the first quarter of this year grew by 1.1%, which is inferior to the indicator of the fourth quarter of 2022 (2.6%).
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