Washington | Inflation in the United States eased last month, giving financial markets confidence the US Federal Reserve will cut interest rates earlier than previously thought.

Headline inflation recorded a zero reading in May pushing the annual rate down to 3.3 per cent from 3.4 per cent, while core inflation – which excludes food and energy costs – rose 0.2 per cent in May, the smallest increase since October, which left the annual rate at 3.4 per cent down from 3.6 per cent.