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Inflation held flat for the month of May after rising 0.3% in April, according to the latest Consumer Price Index report released Wednesday by the U.S. Bureau of Labor Statistics. 

However, viewed on an annual basis, the CPI – which measures the cost of a broad range of goods and services across the U.S. economy – shows that inflation is still 3.3% higher than it was 12 months ago. 

For the month of May, the drop in gasoline prices was offset by the index for shelter, which was up 0.4% for the fourth consecutive month.  The index for food increased 0.1% in May. The energy index fell 2.0% over the month, led by a 3.6% decrease in the gasoline index.  

Viewed on an annual basis, the all-items index was up 3.3% for the 12 months ending May, a smaller increase than the 3.4% increase for the 12 months ending April. 

Excluding the more volatile food and energy prices, inflation has risen 3.4% over the last 12 months. The energy index increased 3.7% for the 12 months ending May. The food index increased 2.1% over the last year.   

The stock market opened higher after the inflation report was released in a sign tha investors view cooling inflation as boosting the likelihood that the Federal Reserve Board may reduce interest rates later this year. The Fed has been keeping interest rates at a 23-year high as part of its efforts to bring inflation down to its target goal of 2%. 

However, the market gave up most of those gains later Wednesday afternoon after the Federal Open Market Committee (FOMC) wrapped up its policy meeting without lowering its benchmark overnight borrowing rate. The Fed issued a statement noting that in recent months “modest further progress” has been made on inflation and signaled the possibility of one rate cut before the end of 2024. The FOMC has future meetings scheduled in July, September, November and December.