WASHINGTON (AP) — The Labor Department reports on U.S. consumer prices in May. The report will be released at 8:30 a.m. EDT on Tuesday.
CONSUMER PRICES: The forecast is that prices rose 0.2 percent overall in May and that core inflation also rose 0.2 percent, according to a survey of economists by data firm FactSet.
LOW INFLATION: In April, higher food and gas prices pushed up prices by 0.3 percent, the most in 10 months. That was seen as evidence that inflation was ticking up from extremely low levels.
Over the previous 12 months, price rose 2 percent. Excluding the volatile food and energy prices, core inflation rose 0.2 percent in April and 1.8 percent over the previous 12 months.
Inflation has been increasing at a very low pace for the past two years. Consumer prices rose just 1.5 percent in 2013 and that was down from 1.8 percent in 2012. Low inflation has allowed the Federal Reserve to keep interest rates exceptionally low in an effort to boost economic growth without having to worry about inflation getting out of hand.
A measure of inflation preferred by the Fed has been running below the Fed's target of 2 percent for the past two years.
The central bank was scheduled to begin a two-day meeting Tuesday with Fed officials widely expected to keep a key short-term rate at a record low near zero. The Fed is not expected to begin increasing that rate for another year.
While it is the Fed's job to keep inflation from rising too quickly, it also watches to make sure that prices do not rise too slowly. That can signal a weak economy and generate further weakness as consumers stop buying big-ticket items in hopes that prices will fall further.
The Fed will update its economic forecasts on Wednesday and analysts are looking for the growth figure to be trimmed to reflect the very weak start to the year. Despite the weakness, which was related to a harsh winter, economists believe the economy will rebound to growth rates of 3 percent or better for the rest of this year.
The first quarter weakness did not derail improvements in the job market with unemployment falling to 6.3 percent, the lowest point in more than five years. But Fed Chair Janet Yellen has suggested that the overall unemployment rate is overstating the health of the job market and the economy, a view that is seen as signaling no sudden action by the Fed to start raising interest rates, as long as inflation gains remain modest.