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- The Consumer Price Index, an inflation measure, increased 3.3% year over year in May.
- That's just below the 3.4% rate in April and the forecast.
- The CPI was unexpectedly unchanged from April to May.
The year-over-year percent change in the Consumer Price Index in May came in just below the forecast and so did the percent change in core CPI.
A news release on Wednesday from the Bureau of Labor Statistics noted the CPI increased 3.3% from May 2023 to this past May. The forecast noted on Investing.com was 3.4%, which would have been the same year-over-year rise as in April.
The CPI was unchanged from April to May. The forecast was an increase of 0.1% following the 0.3% increase from March to April.
Core CPI, which excludes food and energy, rose 3.4% year over year in May. The expectation for this per Investing.com was an increase of 3.5%, which would have also meant a cooler rate than the 3.6% rate before it.
Core CPI rose 0.2% in May from the preceding month. That's less than the forecast of 0.3% and the previous rate of 0.3%.
Gas prices have fallen, helping moderate the overall headline inflation figure. The gas index fell 3.6% in May from the preceding month. The last time this index saw a one-month percent decline was in January when it dropped 3.3%.
"More than offsetting a decline in gasoline, the index for shelter rose in May, up 0.4 percent for the fourth consecutive month," the news release from the BLS stated.
Housing still is a sticky point with prices still rising stubbornly quickly. The shelter index rose 5.4% for the 12 months ending May, just below the 5.5% increase before it and far below the 8.0% rise for the 12 months ending May 2023. Meanwhile, the gas index rose 2.2% from May 2023 to this past May, higher than the 1.2% year-over-year increase in April.
Grocery prices on the other hand have calmed down. The food index rose 2.1% for the 12 months ending May after it was consistently seeing year-over-year increases of 2.2%. More specifically, the food at home index rose 1.0% for the 12 months ending May after a 1.1% increase. This food at home index was unchanged from April to May after dropping 0.2% from March to April.
Meanwhile, the food away from home index rose 0.4% in May from the preceding month and 4.0% year over year in May. The month-over-month change was greater than the previous 0.3% rise, and the year-over-year change was less than the previous 4.1% rise.
A separate news release from the BLS published on Wednesday noted real average hourly earnings rose 0.5% given how average hourly earnings and the CPI fared from April to May. Average hourly earnings rose from $34.77 in April to $34.91 in May, a 0.4% surge.
Inflation measures like the CPI suggest US inflation is still too high although these rates look a lot better than back in 2022. The Fed's interest rate decision will be announced later on Wednesday; it's expected the target range for the federal funds rate will continue to be the same.
"Overall, today's inflation numbers will be a welcome sight for the Fed, though certainly not enough to push them to cut rates," Elizabeth Renter, senior economist at NerdWallet, said.
While Americans are probably not going to see interest rate cuts for now, there could be cuts later this year.
"I think that there'll be enough softness and coolness in the economy for them to begin to cut rates this year," David Kelly, the chief global strategist at J.P. Morgan Asset Management, told Business Insider earlier this month. "And if I had to bet, I bet that we will get two rate cuts, one in September and one in December."