Inflation spike could force Fed's hand on tapering asset purchases

A key inflation gauge that revealed consumer prices rose at their fastest pace in decades last month could prompt the Federal Reserve to start laying the groundwork to begin curtailing its massive monetary support to the U.S. economy.

The Labor Department announced Thursday that the Consumer Price Index (CPI) surged 5% in May from a year prior, the fastest year-over-year jump since 2008. Excluding the volatile food and energy data, core inflation rose 3.8% from a year earlier, the quickest since June 1992. 

The data could have significant implications for the U.S. Central...