U.S. consumer prices excluding food and energy rose more than forecast for a third consecutive month, increasing speculation the Federal Reserve will raise interest rates beyond this month.
The 0.3 percent jump in the so-called core consumer price index in May reported by the Labor Department in Washington today exceeded the median forecast of a 0.2 percent increase by economists in a Bloomberg News survey. Core inflation over the last three months was the highest since 1995. Including food and fuel, prices climbed 0.4 percent.
Transportation companies are among businesses most intent on passing along rising fuel costs. American Airlines and United Airlines, the world's largest carriers, last week joined Delta Air Lines Inc. in raising a surcharge on trans-Atlantic flights by $10 each way to help cover rising fuel costs. The surcharge increased to $75 each way.
Surcharges ``allow us to deal with these spikes in fuel,'' YRC Worldwide Inc. Chief Executive Officer William Zollars said in an interview last week. ``For the most part, our customers have had the ability to pass that on to their customers.''
Rising rents, which account for almost 40 percent of the core CPI, is another reason behind the latest acceleration in inflation. Rising mortgage interest rates and higher prices are making buying a house less affordable and renting more attractive. Improving demand and limited supply are making it easier for landlords to pass along rent increases, economists said.
The pickup in rents has fueled a debate among economists about whether the latest core CPI readings are an accurate measure of the pickup in inflation.
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