The closely-watched US inflation rate has shrunk in May, due to fall in second-hand cars prices. This has increased the possibility of the Federal Reserve to reduce interest rates against the backdrop of various economic challenges, including trade and the slowdown in global growth.

The so-called core consumer price index, excluding energy and food costs, rose by 2% YoY on a consensus forecast of 2.1%. While the 0.1% inflation for the fourth consecutive month last month also missed expectations of 0.2%. The inflation, including energy and food, accelerated in May by 1.8% on an annual basis but missed the forecast for 1.9%.

Since the publication of today’s data, expectations have risen that the Fed may lower interest rates by a quarter percentage point over the next two months.

Lower fuel prices have played a key role in maintaining low inflation rates. Energy prices decreased by 0.6% compared to the previous month and by 0.5% compared to the previous year. There was no price change in clothing after two consecutive months of serious drops.

The inflation data also showed that used car prices dropped by 1.4% from the previous month, while new cars prices rose by 0.1%.

Food costs rose by 0.3% from the previous month, while medical services decreased by 0.4%.