cpi in at point 7 markets will hate it, page-34

re: inflation plunges NEW YORK (Reuters) - U.S. consumer prices likely rose in May, but at a slower pace than a month earlier as growth in energy prices moderated, a Reuters poll showed.

The median estimate from 76 economists polled by Reuters put the Consumer Price Index up 0.4 percent in May after a 0.6 percent rise in the overall index in April.

However, Federal Reserve policy-makers and investors are much more focused on the behavior of the core Consumer Price Index, the CPI with its food and energy items excluded.

The median forecast from 76 economists projected for the core CPI was for a rise of 0.2 percent after 0.3 percent increases both in April and in March.


Several Fed officials have suggested over the past week that inflation is running near the top of their comfort zone, and more interest rate rises may be needed to ward off inflation even as the economy slows.

A higher-than-expected 0.3 percent rise in the core CPI would remove any doubt that the Fed will raise rates again at the conclusion of its June 28-29 monetary policy meeting.

A core CPI reading of 0.2 percent would also keep expectations for a Fed rate hike intact.

Only a smaller-than-expected 0.1 percent rise in the core CPI in May could encourage the market to trim its expectations, at least mildly, for an interest-rate hike at the end of June, analysts said.