- The Consumer Price Index, a key inflation measure, climbed 4.0% in May.
- This year-over-year percent increase comes in well below April's estimate.
May continued the US's inflation cooling from April, per Tuesday's Bureau of Labor Statistics report.
The Consumer Price Index (CPI) increased 4% from May 2022 to May 2023, according to the new report. This comes in below the 4.1% forecast and well under the year-over-year percent increase of 4.9% in April. BLS noted it's also the lowest year-over-year rate since March 2021.
CPI rose 0.1% month over month, per seasonally adjusted data. That's below the 0.2% forecast and less than the 0.4% month-over-month growth in April.
The CPI data comes a day before the Fed is likely to pause its interest rate hikes, with Fed fund futures as of Monday morning revealing a 75% chance policymakers hold steady. The central bank has raised interest rates 10 times in a little over a year with the goal of bringing inflation down to 2%.
Core CPI, which excludes food and energy, increased 5.3% in May from a year earlier, in line with the forecast of 5.3%. Core CPI continued to cool last month, as the previous year-over-year increase in April was 5.5%. This suggests consumers are still feeling the weight of price pressures even as they somewhat ease.
Core CPI rose 0.4% from April to May, per seasonally adjusted data, on par with the 0.4% forecast and month-over-month growth of 0.4% in April.
The all-items CPI index, about a third of which is housing-related costs, increased due in part to a 0.6% increase in shelter prices, up from 0.4% for April 2023.
The CPI was kept in control by a 3.6% drop in energy prices, which rose 0.6% in April. This was driven by a 5.6% drop in gasoline prices – which have fallen 19.7% over the last year – and a 7.7% decline in fuel oil prices.
Food prices increased just 0.2% after two months of no changes.
Transportation services jumped 0.8% for the month, in contrast to the 0.2% fall in April. Used vehicle prices were up 4.4% in May, in line with April.
In a separate release, the Bureau of Labor Statistics reported a 0.3% increase in average hourly earnings, adjusted for inflation, for May. Real earnings rose 0.2% annually after being negative for much of the inflation surge.