Industrial production in the U.S. failed to meet expectations for a modest acceleration from stagnant growth while core consumer prices increased by the most in almost three years, according to Bloomberg. On Wednesday, the Federal Reserve reported that factories, mines, and utilities in the U.S. posted a 0.1% increase in output during May after no growth during the prior month. The small increase disappointed economists who had forecast for a 0.2% increase. Factory production was up 0.4%, but slumping utility output and supply chain disruptions from the Japanese earthquake and tsunami held back the sector.

Meanwhile, the Labor Department reported that its consumer-price index rose by 0.2% in May, while the core index that excludes volatile food and energy prices rose by 0.3%, which is the most since July 2008. According to The Wall Street Journal, the gains put the overall index 3.6% higher year-over-year, while core prices added 1.5% annually. The data puts core prices on a projected pace of growth of 2.4% for 2011 as a whole, which is about the 2% target set by policymakers. The combination of slower industrial growth and rising price growth leaves policymakers in a difficult position of needing to contain inflation without hampering economic growth.

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