WASHINGTON, June 30: A key gauge of core US consumer prices rose a moderate 0.2 per cent last month, but inflation-adjusted spending advanced just 0.1 per cent as energy prices pressured shoppers, a government report showed on Friday.

The increase in the core price index for consumer spending, which strips out volatile food and energy prices and is the Federal Reserve's favoured inflation gauge, kept the 12-month gain at the 2.1 percent it hit in April, the Commerce Department said.

The reading on core inflation matched economists' expectations and brought some relief to financial markets still uncertain about whether the Fed would continue to push interest rates higher.

“The year-over-year core deflator was flat so it does not seem like we have a ramp up. This lowers the probability of an interest rate increase in August,” said Robert MacIntosh, chief economist at Eaton Vance Management in Boston.

US stock futures rose, as did prices for US government bonds. The dollar was steady.—Reuters