Rising Rents, Healthcare Costs Support U.S. Underlying Inflation

“U.S. consumer prices moderated in May, but sustained increases in housing and healthcare costs kept underlying inflation supported, which could still allow a cautious Federal Reserve to raise interest rates this year.While another report on Thursday showed an increase in the number of Americans applying for unemployment benefits last week, the trend remained consistent with a healthy labor market.”

“While another report on Thursday showed an increase in the number of Americans applying for unemployment benefits last week, the trend remained consistent with a healthy labor market.The data came a day after the Fed lowered its assessment of the jobs market and suggested a slower path to interest rate hikes.”The economy is generating enough heat to produce some inflation, even if the Fed has worries about the long-term trend for economic growth being too weak to lift interest rates much higher for now,” said Chris Rupkey, chief economist at MUFG Union Bank in New York.”

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