NEW YORK (Reuters) - The dollar rose to a one-month high against a basket of currencies on Tuesday, aided by data showing inflation speeding up, but its gains were capped as traders awaited the outcome of the U.S. Federal Reserve’s two-day policy meeting for hints of plans to start tapering its bond purchases. Data on Tuesday showed U.S. retail sales fell more than expected in May, with spending rotating back to services from goods as vaccinations allow Americans to shake off COVID-19 restrictions. But robust demand is outpacing supply, stoking inflation, with several recent readings of inflation gauges - including the producer price index released on Tuesday - signaling rising price pressures. “The U.S. dollar kept firm as another hot reading on inflation overshadowed a chilly consumer,” said Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington. The Fed’s two-day meeting was set to end on Wednesday and it is due to issue a policy statement afterward. So far Fed officials, led by Chair Jerome Powell, have said rising inflationary pressures are transitory and ultra-easy monetary settings will stay in place for some time. Recent economic data has raised concerns that price pressure could force an earlier stimulus withdrawal. “Assuming that some of the recent increase in inflation is indeed sustained, we would argue that the Fed will react to it, supporting the USD later this year,” analysts at BofA Global Research said in note. Nearly 60% of economists in a Reuters poll expect a tapering announcement in the next quarter. The dollar index, which measures the greenback against a basket of six currencies, was 0.04% higher at 90.529, after rising as high as 90.677, its highest since May 14. The pound fell to a one-month low against the dollar on Tuesday in what analysts said was the breaking of a technical level that did not change the bullish narrative on the British currency. The British currency was last down 0.18% against the greenback. In cryptocurrencies, bitcoin hovered around the $40,000 level, a day after it climbed above that mark for the first time in more than two weeks, aided by the promise of fresh investment from major backer MicroStrategy and an upbeat tweet from Tesla boss Elon Musk. Musk on Sunday flagged that the carmaker could resume transactions using the token if miners can use cleaner energy to process them. Graphic: Bitcoin recovers after sharp dive - Reporting by Saqib Iqbal Ahmed in New york, Julien Ponthus in London, Kevin Buckland in Tokyo and Tom Westbrook in Singapore; Editing by Kim Coghill, Will Dunham, Emelia Sithole-Matarise, Jan Harvey and Barbara Lewis Our Standards: The Thomson Reuters Trust Principles.