Consumer prices in the United States cooled last month, rising just 0.1% from April to May and extending the past year’s steady easing of inflation. At the same time, some measures of underlying price pressures remained high.
Measured year over year, inflation slowed to just 4% in May — the lowest 12-month figure in over two years and well below April’s 4.9% annual rise. The pullback was driven by tumbling gas prices, a much smaller rise in grocery prices than in previous months and less expensive furniture, air fares and appliances.
Tuesday’s inflation figures from the government arrived one day before the Federal Reserve is expected to leave interest rates alone after imposing 10 straight rate hikes dating back to March 2022. After a two-day meeting, the Fed will likely announce that it’s skipping a rate hike but may hint that it will resume raising rates as soon as July.
Last month’s drop-off in overall inflation isn’t likely to convince the Fed’s policymakers that they’re close to curbing the high inflation that has gripped the nation for two years. The central bank tends to focus most closely on “core” prices, which exclude volatile food and energy costs and are considered better able to capture underlying inflation trends. These prices remain stubbornly high.
Core prices rose a sizable 0.4% from April to May, the sixth straight month of increases at that level or higher. Compared with a year ago, core inflation slipped from 5.5% to 5.3% but is still far above the Fed’s target of 2%.
Yet some positive signs, even in the measures of core prices, suggest that underlying inflation pressures may be receding. The outsize increases in core prices were driven mainly by rising rents and by another spike in used car prices. Real-time data suggests that increases in those categories will soon ease and help cool inflation.
“Outside of those two components, the trend has become very encouraging,” Stephen Juneau, an economist at Bank of America, said in a research note. “We should continue to see improvement in core” prices.
Source : AP News
