Fuel costs push up US inflation

US inflation rose at its fastest pace for six months in May because of sharply higher energy costs.

Consumer prices rose 0.6% last month, government figures showed, the steepest monthly increase since last November.

Petrol costs surged by 5.7% last month, driven by the soaring global cost of oil which recently reached more than $139 a barrel.

Rising inflation is a worry for the Federal Reserve, which has cut rates aggressively to stimulate growth.

Above expectations

May's figure topped market expectations and represented a jump from April's 0.2% rate.

On an annual basis, inflation touched 4.2% in May, again above analysts' expectations.

Gasoline prices rose at their fastest monthly rate this year while food prices rose 0.3%.

"We know oil is flying through the roof. Consumers are forced to eat the price"
Lindsey Piegza, FTN Financial

Excluding both fuel and food costs, so-called core inflation was up 0.2% on a monthly basis and 2.3% compared with a year ago.

The figures increase the prospect that the next move in US interest rates could be up.

The Fed has slashed rates in the past eight months as the economy has slowed dramatically but it will be mindful of evidence of growing inflationary pressures.

But analysts said price inflation was largely confined to energy at this stage.

"It is not as bad as it looks," Lindsey Piegza, from FTN Financial, said of the numbers.

"We know oil is flying through the roof. Consumers are forced to eat the price. There is nothing they can do."

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