Easing US inflation stokes interest rate cut debate

The pace of price increases in the US showed signs of slowing last month, after a streak of higher-than-expected inflation data had stoked concerns about the world's largest economy. Consumer prices rose 3. 4% in the 12 months to April, down from 3. 5% for the month before, the Labor Department said. Higher rents and petrol costs accounted for the majority of the increase in the cost of living. But analysts said the fall in inflation was unlikely to resolve debates about how the US central bank should set interest rates. The Federal Reserve has kept its key interest rate hovering around 5. 3% since last July, hoping that the highest borrowing costs in two decades will help ease pressures pushing up prices. Expectations of imminent rate cuts have been repeatedly pushed back since the start of the year, as economic growth holds up and prices continue to rise faster than the Fed's 2% annual target. A separate report on retail sales on Wednesday showed spending was flat in April, compared with March, raising speculation that the economy might be starting to weaken.