US consumer prices up 0.2 pct. in May, 2.8 pct. annually

WASHINGTON – U.S. consumer prices rose 0.2 per cent in May, with surging gasoline costs driving much of the increase.

The Labor Department says the consumer price index climbed 2.8 per cent in May from a year earlier, putting inflation on its fastest annual pace since February 2012. But core prices — which exclude the volatile food and energy categories — have risen a milder 2.2 per cent over the past 12 months.

Inflation remains relatively tame, although it has picked up this year. Gasoline prices climbed 1.7 per cent in May and surged 21.8 per cent from a year ago.

But the slower growth in core prices likely means that the Federal Reserve will raise interest rates only gradually. Fed officials are expected to raise rates on Wednesday for the second time this year.