US consumer prices moderated in May, but sustained increases in housing and healthcare costs kept underlying inflation supported. 

The US Labor Department said its consumer price index increased 0.2% last month after rising 0.4% in April. In the 12 months to May, prices advanced 1% after rising 1.1% in April. 

Economists had forecast that inflation would gain 0.3% last month and advance 1.1% from a year ago. 

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

The Fed has a 2% inflation target and tracks an inflation measure which is currently at 1.6%. The Fed kept interest rates unchanged last night and said it expected inflation to remain below its target through 2017. 

While the Fed signaled it still planned two rate hikes this year, there was less conviction, with six officials expecting only a single increase, up from one in March. 

The Fed raised its benchmark overnight interest rate in December for the first time in nearly a decade. 

Today's figures show that petrol prices rose 2.3% last month after surging 8.1% in April. Food prices fell 0.2%, reversing the prior month's increase. 

Within the core inflation basket, housing and medical costs maintained their upward trend. Owners' equivalent rent of primary residence rose 0.3% after rising by the same margin in April. 

Medical care costs increased 0.3% after a similar gain in April. The cost of hospital services shot up 0.7% after rising 0.3% the prior month. Doctor visit costs rose 1%, but the cost of prescription medicine fell 0.4% after increasing 0.7% in April.

The figures also show that clothing prices rose 0.8%. The cost of used cars and trucks dropped 1.3%, the biggest fall since March 2009. Prices for new motor vehicles fell 0.1%.