Inflation rose less than expected in May, a month when the effects of higher tariffs were starting to become more widespread.

Inflation moved up in May as Trump's tariffs threatened to filter into consumer prices, CPI report shows. Gasoline prices declined for fourth month

The Federal Reserve is widely expected to hold interest rates steady next week, with investors focused on new central bank projections that will show how much weight policymakers are putting on recent soft data and how much risk they attach to unresolved trade and budget issues and an intensifying conflict in the Middle East.

U.S. inflation picked up a bit last month as higher prices for groceries and some imported goods were largely offset by cheaper gas, travel services, and rents.

The latest Producer Price Index, a closely watched measurement of wholesale inflation, rose 0.1% in May, lifting the annual rate to 2.6%, according to Bureau of Labor Statistics data released Thursday.

A sustained surge in oil prices is likely to complicate the U.S. fight against inflation. A $10-a-barrel increase would boost year-over-year growth in the consumer-price index by 0.5 percentage points,

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Overall, though, the trend for inflation has been a steady decline toward the Federal Reserve’s 2% annual target. The Fed, however, is not expected to change interest rates when it meets next week.