US consumer prices fell in May for the first time in two years, pulled down by falling gasoline prices, but the core inflation indicator picked up speed for a third straight month, the Labor Department reported Thursday.
The broad consumer price index fell 0.3 percent, taking the year-on-year rate to 1.7 percent. Gasoline prices fell 6.8 percent in the month, while food prices were unchanged.
But stripping out more volatile fuel and food, the core CPI -- a key referent for the Federal Reserve's interest rate-setting policies -- rose 0.2 percent, the same pace as the previous two months and a 2.3 percent annual core inflation rate from May 2011.
Driving the core CPI rise were pickups in prices of health care, housing, clothing and used vehicles.
The numbers mapped wholesale price data released Wednesday, which broadly showed the same impact of lower fuel and food prices, but at their core were also higher.