WASHINGTON, June 14: 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 Labour Department reported on Thursday.

The broad consumer price index fell 0.3 per cent, taking the year-on-year rate to 1.7 per cent. Gasoline prices fell 6.8 per cent 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 per cent, the same pace as the previous two months and a 2.3 per cent 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 on Wednesday, which broadly showed the same impact of lower fuel and food prices, but at their core were also higher.

New claims for the US unemployment benefits rose last week, building on a worrying upward trend in the pace of layoffs, the government said on Thursday.

The Labour Department reported 386,000 jobless claims which were filed in the week ending June 9, an increase of 6,000 claims from the prior week’s upward revised number.

The four-week moving average of new claims — an indicator of the trend in layoffs has increased by 3,500 to 382,000.

“More evidence suggests that job growth is slowing further,” said Jennifer Lee at BMO Capital Markets.—AFP