scorecard
  1. Home
  2. policy
  3. economy
  4. news
  5. Inflation continues to come back to earth in May as the Fed decides its next move

Inflation continues to come back to earth in May as the Fed decides its next move

Noah Sheidlower   

Inflation continues to come back to earth in May as the Fed decides its next move
  • 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.



Popular Right Now



Advertisement