Consumer prices climb 0.1 in May; up 4.0 yearonyear
Core CPI rises 0.4; up 5.3 yearonyear

 WASHINGTON, June 13 Reuters U.S. consumer prices barely rose in May and the annual increase in inflation was the smallest in more than two years, though underlying price pressures remained strong, supporting the view that the Federal Reserve would keep interest rates unchanged on Wednesday while adopting a hawkish posture.

The smallerthanexpected rise in the Consumer Price Index, reported by the Labor Department on Tuesday, reflected decreases in the costs of energy products and services, including gasoline and electricity. But rents remained sticky and prices of used cars and trucks rose further. The report was published as Fed officials began a twoday policy meeting.

The moderate slowing provides the Fed room to pause its rate hikes this week, said Kathy Bostjancic, chief economist at Nationwide in New York. However, if economic data continues to surprise to the upside and inflation remains sticky, the door is open for another rate hike in the coming months, as soon as July.

The CPI increased 0.1 last month after gaining 0.4 in April. Gasoline prices dropped 5.6, while electricity declined for a third straight month. Utility gas also cost less.

But food prices rose 0.2 after being unchanged for two consecutive months as fruits and vegetables, nonalcoholic beverages and other food products became more expensive. Meat and fish, however, were cheaper, while egg prices fell…