 Prices in May were up 2.6 percent over the last year, a smaller annual increase than the month before. Stripping out volatile food and energy prices, so-called core inflation was the lowest it's been in more than three years. Investors are hoping that slowdown in price hikes will clear the way for the Federal Reserve to start cutting interest rates, perhaps in September. Friday's report also showed personal spending rose only modestly in May, while the personal savings rate inched up.