Inflation? What inflation?

U.S. consumer prices inched up in May, both less than the previous month and lower than expected, throwing another monkey wrench into the US Federal Reserve Bank’s plans to raise interest rates.

The US Labor Department on Thursday reported its Consumer Price Index advanced 0.2% last month after rising 0.4% in April. In the 12 months through May, the CPI increased 1.0% after rising 1.1% in April.

Economists had predicted a 0.3% increase in the CPI last month and a 1.1% rise from a year ago.

The so-called core CPI, which strips out food and energy costs, rose 0.2%, the same as April. That took the year-on-year core CPI rise to 2.2% from 2.1% in April.

The US central bank would like to see an inflation rate of 2% and tracks an inflation measure, which is currently at 1.6%. On Wednesday, the Fed kept interest rates unchanged and said it expected inflation to remain below its target through 2017. The Fed has hinted that it plans to raise rates two times this year, but after the new report more analysts think there will only be one.

Gasoline prices rose 2.3% last month after surging 8.1% in April. Food prices fell 0.2%, reversing the prior month’s increase.

Housing and medical costs made the biggest advances. Owners’ equivalent rent of primary residence and medical costs both rose 0.3%, the same as April.

A shopper enters the Michael Kors store in the SoHo section of New York City, U.S. May 31, 2016. REUTERS/Brendan McDermid

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