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U.S. Inflation Accelerates to Six-Year High, Eroding Wages

  • Consumer price index rose 2.8% in May from a year earlier
  • Inflation-adjusted pay unchanged over 12-month period
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Sarah House, senior economist at Wells Fargo Securities, says cyclical pressures on inflation are emerging.(Source: Bloomberg)
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U.S. inflation accelerated in May to the fastest pace in more than six years, reinforcing the Federal Reserve’s outlook for gradual interest-rate hikes while eroding wage gains that remain relatively tepid despite an 18-year low in unemployment.

The consumer price index rose 0.2 percent from the previous month and 2.8 percent from a year earlier, matching estimates, a Labor Department report showed Tuesday. The annual gain was the biggest since February 2012 and follows a 2.5 percent increase in April. Excluding food and energy, the core gauge was up 0.2 percent from the prior month and 2.2 percent from May 2017, also matching the median estimates of economists.