CPI Report: No Increase to Inflation in May; Fed Keeps Interest Rates Steady

June 13, 2024

Finally, some positive surprises as both headline and core inflation beat forecasts.

Corporate economist with Navy Federal Credit Union, Robert Frick, regarding the latest inflation report released by the U.S. Bureau of Labor Statistics on Wednesday. The report reflects a flat consumer price index in May, indicating inflation has slowed down.

Why It Matters: The Consumer Price Index (CPI) measures a mixed basket of costs of goods and services in the U.S. and is used as an important gauge of inflation (high inflation = your dollar buys you less). While the pace of inflation has decreased from its 2022 peak, the annual rate nonetheless continues to be above the federal government’s 2% target. Hours after the latest CPI report, the Fed announced its decision to keep rates steady for now, holding them at the 23-year high of 5.25%–5.5%  (the government raises borrowing costs to try to slow inflation and will cut borrowing costs when inflation subsides).

The Numbers: The report reflects prices staying the same from April to May, and increasing 3.3% over the past year.  Core inflation (“core CPI”) – seen as a better data point as the measure strips out volatile energy and food prices – showed that prices increased 3.4% annually.

Something To Consider: Frick noted, “There was relief at the pump, but unfortunately home and apartment costs continue to rise and remain the main cause of inflation. Until those shelter costs begin their long-awaited fall, we won’t see major drops in CPI.

Read More: Inflation slows in May, with consumer prices up 3.3% from a year ago (CNBC)

Inflation finally gets the hint (Morning Brew)

Photo Credit: Mark OFlynn / Unsplash

by Emily Hooker, based in Texas