WASHINGTON (AP) — Less-expensive gas likely slowed U.S. consumer inflation in May. But when the government reports the latest monthly price data Wednesday, Wall Street traders and Federal Reserve officials will be paying particularly close attention to an index that excludes volatile food and energy costs.

These so-called “core” prices are expected to have risen 0.3% from April to May, the same as in the previous month, according to a survey of economists by data provider FactSet. Compared with a year earlier, core inflation is thought to have dipped from 3.6% to 3.5%.

Even as overall inflation moderates, such necessities as groceries, rent and health care are much pricier than they were three years ago — a continuing source of public discontent and a political threat to President Joe Biden’s re-election bid. Most other measures suggest that the economy is healthy: Unemployment remains low, hiring is robust and consumers are traveling, eating out and spending on entertainment. Yet polls show that the cumulative price increases are weighing on Biden’s popularity.

The Fed is closely monitoring each month’s inflation report for signs that it’s succeeding in its fight against rising prices. A rise in core consumer prices of 0.3% is too high, over time, to be consistent with the central bank’s 2% annual inflation target and could be seen as a disappointment. Still, the Fed’s officials prefer a separate inflation measure, which typically comes in slightly lower than Wednesday’s consumer price index.

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After their latest two-day policy meeting ends Wednesday — just hours after the release of the May inflation data — the officials are poised to leave their benchmark interest rate unchanged at a 23-year high of about 5.3%.

Lower gas prices are thought to have slowed overall inflation to just 0.1% from April to May, according to FactSet, down from 0.3% the previous month and the lowest figure since October. Measured from a year earlier, consumer prices are believed to have risen 3.4% in May, the same as in April.

Persistently elevated inflation has posed a vexing challenge for the Fed, which raises interest rates — or keeps them high — to try to slow borrowing and spending, cool the economy and ease the pace of price increases. The Fed has kept its key rate unchanged for nearly a year after having rapidly raised it in 2022 and 2023. Those higher rates have led, in turn, to more expensive mortgages, auto loans, credit cards and other forms of consumer and business borrowing.

The longer the Fed keeps borrowing costs high, the more it risks weakening the economy too much and potentially causing a recession. Yet if it cuts rates too soon, it risks reigniting inflation. Most of the policymakers have said they think their rate policies are slowing growth and should curb inflation over time.

Inflation had fallen steadily in the second half of last year, raising hopes that the Fed could pull off a “soft landing,” whereby it manages to conquer inflation through higher interest rates without causing a recession. Such an outcome is difficult and rare.

But inflation came in unexpectedly high in the first three months of this year, delaying hoped-for Fed rate cuts and possibly imperiling a soft landing.

In early May, Chair Jerome Powell said the central bank needed more confidence that inflation was returning to its target before it would reduce its benchmark rate. Powell noted that it would likely take more time to gain that confidence than Fed officials had previously thought. Several officials have said in recent weeks that they needed to see several consecutive months of lower inflation.

In addition to declining gas prices, economists have estimated that prices for several other items fell from April to May, including clothing, furniture and new cars. Though used cars are projected to have risen in price after falling for several months, that may prove a temporary blip.

The cost of apartment rents, a key driver of inflation, could cool slightly. And auto insurance is thought to have risen by a sharp 1% just from April to May, according to economists at Goldman Sachs, though that would be down from increases of 1.8% and 2.6% in the previous two months.

Some signs suggest that inflation will continue to cool in the coming months. Americans, particularly lower-income households, are pulling back on their spending. In response, several major retail and restaurant chains, including Walmart, Target, Walgreen’s, McDonald’s and Burger King, have responded by announcing price cuts or deals.

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