US inflation lower than expected

Petrol prices rose in May but are still lower than they were last year

US consumer prices rose less than had been expected in May, as the recession continued to keep inflation down.

The Consumer Prices Index (CPI) from the Labor Department rose a seasonally adjusted 0.1% last month, well under the 0.3% rise that had been expected.

Although petrol prices rose 9.6% in the month, they were still well below the level seen in the same month of 2008.

As a result, consumer prices fell 1.3% year-on-year, which was the biggest drop seen in 59 years.

Analysts said it was surprising that the rising petrol prices had not had more of an impact on the monthly inflation figures.

"It's a real testament to the lack of pricing power anywhere in the economy right now that this wasn't reflected," said Mark Vitner, senior economist at Wachovia in North Carolina.

"I'm worried about inflation in the long term, but I'm not worried about inflation in 2009, or even 2010."