Cpi Shows Slight Slowdown Boosting Fed Outlook

Inflation Remains Elevated, BI Board Keeps Rate at 625

CPI Shows Slight Slowdown, Boosting Fed Outlook

Key Takeaways from May's Consumer Price Index Report

The Bureau of Labor Statistics released the May Consumer Price Index (CPI) report, providing key insights into the current state of inflation.

The CPI-U remained unchanged in May on a seasonally adjusted basis. However, it rose 3.3% from a year earlier, a slight slowdown from April's 3.4% increase.

The BI Board of Governors, meeting on May 21st-22nd, 2024, decided to maintain the BI rate at 625%. This decision reflects the Board's assessment that inflation remains elevated but may be showing signs of moderating.

The report boosted the likelihood of Fed policymakers projecting two more interest rate hikes this year. The expectation of further monetary tightening has boosted the value of the US dollar against other currencies.

Here are five key takeaways from the May US consumer price index report:

• Core inflation, excluding food and energy, slowed to 3.1%, down from 3.2% in April.
• Gasoline prices fell 4.9%, contributing to the overall slowdown in inflation.
• Food prices rose 1.2%, the largest monthly increase since April 2020.
• Shelter costs, the largest component of the CPI, rose 0.6%, the same as in April.
• The annual inflation rate for used cars, which had been a major driver of inflation, declined to 16.1% from 22.7% in April.

Overall, the May CPI report suggests that inflation is easing but remains a concern for policymakers and consumers alike.