A plunge in energy costs pulled &to=http:// english.pravda.ru/economics/2002/09/11/36394.html ' target=_blank>U.S. consumer prices down 0.1% in May, first drop in 10 months, according to a government report Wednesday that suggests inflation pressures are under wraps.
Even excluding volatile food and energy prices, the core consumer price index rose a smaller-than-expected 0.1% last month, the Labor Department said.
Economists had expected overall consumer prices to hold steady and prices outside food and energy to rise 0.2%.
The decline in its closely watched Consumer Price Index followed big gains of 0.4% in February, 0.6% in March and 0.5% in April. Those increases had been driven by a surge in energy costs as crude oil prices hit all-time highs in early April.
Meanwhile, another goverment report showed that production at the nation's factories, mines and utilities rose a solid 0.4% in May, reversing a 0.3% decline in April. The increase reflected a big 0.6% jump in output in manufacturing as auto production stopped falling and other sectors actually posted increases, reports USA Today.
Economists said the strong industrial performance underscored the fundamental health of the economy and the potential for &to=http:// english.pravda.ru/economics/2002/01/18/25845.html ' target=_blank>inflation ahead, bolstering expectations for further interest rate hikes from the Fed.
"This report would support the Federal Reserve's continued focus to keep inflation in check," said Lynn Reaser, chief economist at Banc of America Capital Management in Boston.
The Fed has raised overnight rates to 3 percent from an ultra-low 1 percent in eight small steps over the past year, and analysts are betting on three more quarter-percentage-point rate hikes this year, including one at the end of the month.
Prices for U.S. government bonds, which had moved higher on the inflation data, reversed on the show of manufacturing muscle. Stocks enjoyed the strong growth, low inflation combination and major indexes were up slightly in early trade.
Separately, the Commerce Department said U.S. business inventories grew 0.3 percent in April as sales rose 1.2 percent. At that sales rate, it would take only 1.3 months to empty stockpiles, matching a record low hit last year.
The Investigative Committee of the Russian Federation put the head of the contractor company of Russia's space corporation Roskosmos, Sergei Slastikhin, on international wanted list
"Washington operators of the sanctions machine ought to get acquainted with the history of Russia, to stop the unnecessary fussing," spokesperson for the Foreign Ministry said