US data from May showed that inflation is decelerating — but stubborn price gains showed that the Federal Reserve remains under pressure to hike interest rates this year.

The Consumer Price Index — a closely-monitored measure of inflation that tracks changes in the costs of everyday goods and services — rose 4% in May versus a year earlier, according to the US Bureau of Labor Statistics.

That was a step down from April’s 4.9% increase and marks the smallest monthly increase in more than two years. Last June, inflation had peaked at 9.1%.

The latest number gives breathing room for the Federal Reserve — which has hiked rates in 10 consecutive moves since early 2022 — to opt for a long-anticipated pause when it meets this week.

Still, core CPI, which excludes volatile food and energy prices, rose a concerning 0.4% from a month ago, and 5.3% from one year ago. Month over month, prices increased by 0.1%, according to the Bureau of Labor Statistics’ report released on Tuesday.

Rising housing costs were the largest contributor to last month’s increase, followed by used cars and trucks, which increased 4.4%.

Stock rose Tuesday, with the Dow climbing 145 points or 0.4% and the Nasdaq advancing 0.8%.

Among other indexes that rose in May was for motor vehicle insurance, which increased 2.0%, as well as transportation services, apparel, personal care and education.

The index for food saw a 0.2% uptick in May after being unchanged in March and April. The food index rose 6.7% over the last 12 months. The energy index, meanwhile, fell 11.7% over the last year.

While the report showed an easing year-over-year inflation rate, it’s still above the Federal Reserve’s 2% target. The continued rise in prices comes the same month America’s resilient job market added a mammoth 339,000 jobs.

The Fed hiked interest rates by another quarter percentage point last month — bringing the benchmark funds rate from 5% to 5.25% — in another aggressive move to tame inflation and avoid sparking a recession.

The central bank hinted that it was done hiking interest rates after raising them to a high not seen in 16 years.

Tuesday’s CPI report is crucial to the Fed’s next rate decision, which is set to be announced on Wednesday.

Fed officials were reportedly divided earlier this month on whether to pause hikes in June, according to the minutes of their May 2-3 meeting.

“Several (policymakers) noted if the economy evolved along the lines of their current outlooks, then further policy firming after this meeting may not be necessary,” the minutes said.

At the same time, “some” officials said that the persistence of high inflation meant that “additional (rate hikes) would likely be warranted at future meetings.”

In an overt shift in May, the Fed no longer said it “anticipates” further rates will be needed, only that it will watch incoming data to determine if more hikes “may be appropriate.”

The Fed governors cut from their previous policy statement in March indicating that more rate hikes might be needed.