- The consumer price index held flat in May but increased 3.3% from a year ago, slightly below market expectations.
- Excluding volatile food and energy prices, core CPI increased 0.2% on the month and 3.4% from a year ago.
- Price increases were held in check by a 2% drop in the energy index and just a 0.1% increase in food prices.
The latest consumer price index report shows inflation loosening its grip on the US economy in May. Both the headline and core CPI numbers came in below expectations.
CPI Monthly Change Flat, Annual Increase at 3.3%
The consumer price index held flat in May on a monthly basis. However, prices were still up 3.3% from a year ago. Economists had forecast a 0.1% monthly gain and a 3.4% annual increase.
Core Inflation Rises 0.2% Monthly, 3.4% Annually
Stripping out volatile food and energy costs, core CPI rose 0.2% for the month and 3.4% from May 2021. Forecasts were for a 0.3% monthly gain and 3.5% annual rate.
Energy Prices Pull Back, Food Costs Edge Up
Falling energy prices helped restrain inflation in May, with that index dropping 2% for the month. Meanwhile, food costs ticked up just 0.1%.
Housing Costs Remain Stubbornly High
The shelter component of CPI increased 0.4% in May and was up 5.4% from a year ago. Housing numbers have been a sticking point in the Federal Reserve‘s inflation fight.
Inflation Relief Welcome But More Needed
The lower-than-expected CPI numbers provide some inflation relief. But the Fed likely needs several more months of moderating price pressures before considering a change in policy.
Conclusion
May’s CPI report brought a welcome slowdown in inflation. But with housing costs still rising rapidly, further moderation is needed before the Federal Reserve eases its aggressive policy stance.
