US consumer prices rose marginally in May amid a slowdown in the pace of increases in the cost of gasoline, pointing to moderate inflation pressures.

The inflation data comes a day before the US central bank is expected to raise rates for the second time this year.

The Fed's preferred inflation measure, the personal consumption expenditures price index excluding food and energy, rose 1.8 percent on a year-on-year basis in April and is just below the Fed's 2 percent target.

"The data were good enough to keep the Fed on track, but not really good enough to do much else," said Aaron Kohli, an interest rate strategist at BMO Capital Markets in New York.

Fed officials are due to update their economic and rate projections on Wednesday and investors will watch whether the median rate hike expectation for this year increases to four, from three.

Benchmark 10-year notes fell 6/32 on the day in price to yield 2.979 percent, up from 2.957 percent on Monday. The yields briefly dipped on the inflation data.

Retail sales data, due out on Thursday, is the next major US economic report, and will be watched for further indications of price pressures.

The US will sell $14 billion in 30-year bonds on Tuesday, the final sale of $68 billion in new coupon-bearing supply this week. The Treasury Department saw solid demand for a $32 billion sale of three-year notes and $22 billion sale of 10-year notes on Monday.

The European Central Bank meeting on Thursday is also a key focus after the bank's chief economist said last week that the ECB will debate whether to end bond purchases later this year.

US President Donald Trump and North Korean leader Kim Jong Un pledged on Tuesday to work toward complete denuclearization of the Korean peninsula while Washington committed to provide security guarantees for its old enemy.