Consumer Prices Cool to a 4% Pace as Energy Prices Fall
The consumer price index climbed by a lower-than-expected 0.1% in May to a 4% annual pace, the slowest since March 2021. The drop was fueled largely by a 3.6% drop in energy costs, along with a drop in prices for airfares and household furnishings.
- Core CPI, excluding volatile food and energy prices, climbed 0.4% in May, matching April’s pace. But core prices slowed to 5.3% year over year in May from 5.5% in April, the Bureau of Labor Statistics reported.
- Rents climbed 0.5% in May, to an 8.7% annual pace, while used car and truck prices climbed 4.4% for the second straight month. Private-sector rent data suggest relief is coming. And the used-car price spike is “not sustainable,” Wells Fargo economists wrote.
- Supermarket prices gained 0.1% in May, from April, while the cost of buying food away from home climbed 0.5%. Grocery prices for fruit and vegetables, some meats, and nonalcoholic beverages such as juice all gained during the month, but egg prices fell 14%, and dairy prices eased 1.1%.
- Packaged product companies including Kimberly-Clark, PepsiCo, General Mills, and Tyson Foods have talked about their ability to raise prices, according to Accountable US, a liberal-leaning advocacy group. And they have signaled their intention to continue to take “price actions” despite the Federal Reserve’s ongoing inflation battle.
What’s Next: May’s cooler-than-expected inflation data helped lift the S&P 500 to a 52-week high on Tuesday, ahead of the Fed’s interest-rate decision today. Futures markets anticipate the probability that the Fed will pause on more rate increases this month.
—Megan Cassella, Karishma Vanjani, and Janet H. Cho