Rate of U.S. Inflation Slows Again as Consumer Prices Drop for Third Month in May

Impacted again by the COVID-19 pandemic, American consumers in May paid more for food and shelter and less for gasoline, clothing and travel, according to government figures released Wednesday, June 10.

Consumer prices declined overall for a third month in a row as underlying or core inflation remained weak not only for the month but from a year ago.

U.S. consumer prices fell 0.1% in May after a 0.8% decline in April that was the largest for a month since December 2008, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a broad measure of what Americans pay for everyday items ranging from cloths to cars.

"It will be a while before the economy returns to normal," Stephen Stanley, chief economist at Amherst Pierpont, said in a note reported by Bloomberg News, "and the CPI will be hard to interpret until we get there."

Prices at the pump declined 3.5% last month after sinking 20.6% in April. Gasoline prices sank 33.8% from a year ago. The broader index for energy, which combines items like gasoline, electricity and fuel oil, declined 1.8% in May after falling 10.1% in April. Energy prices year-over-year declined 18.9%.

Overall food prices for the month rose 0.7% after advancing 1.5% previously. Food prices jumped 4% year-on-year, their largest 12-month increase since February 2012.

"The food at home index increased 4.8 percent over the last 12 months, with all six major grocery store food group indexes rising over that span," the Labor Department’s report noted. "The index for meats,
poultry, fish, and eggs rose 10.0 percent over the last year, its largest 12-month increase since the period ending May 2004."

The food away from home index climbed 2.9% from a year ago.

Excluding the more volatile food and energy components, so-called core consumer prices also fell 0.1% last month after slipping 0.4% in April and sliding 0.1% in March. Before then, consumer prices had last registered lower in January 2010.

"This is the first time this index has ever declined in three consecutive months," the report said. "Along with motor vehicle insurance and apparel, the indexes for airline fares and used cars and trucks declined in May. The indexes for shelter, recreation, medical care, household furnishings and operations, and new vehicles all increased."

Shelter or housing costs rose 0.2% in May after logging flat in each of the two previous months, while their year-over-year level increased 2.5%. Components of shelter include pricing items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. The index accounts for about one-third of the entire CPI.

In the headline figure, U.S. inflation rose 0.1% through the 12 months ending May, the smallest 12-month increase since September 2015 and after climbing 0.3% previously.

Core inflation rose 1.2% over the last 12 months, the smallest core rate since March 2011 and after rising 1.4% previously. This core, "all items less food and energy" index is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) as it helps the central bank decide where to set its key interest rate.

The following table of key inflation figures is for the last seven months through May, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi) on June 10, 2020. To index the data each month, the BLS monitors the prices of about 80,000 consumer goods and services from around the nation. All monthly and annual pricing changes are in percentages.

November 2019 to May 2020 Consumer Prices – Gains & Losses in Percent

  Nov 2019 Dec 2019 Jan 2020 Feb 2020 Mar 2020 April 2020 May 2020 12 Month
All items 0.2 0.2 0.1 0.1 -0.4 -0.8 -0.1 0.1
  Food 0.1 0.2 0.2 0.4 0.3 1.5 0.7 4.0
    Food at home 0.1 .0 0.1 0.5 0.5 2.6 1.0 4.8
    Food away from home 0.2 0.3 0.4 0.2 0.2 0.1 0.4 2.9
  Energy 0.8 1.6 -0.7 -2.0 -5.8 -10.1 -1.8 -18.9
    Energy commodities 1.2 3.0 -1.6 -3.5 -10.4 -20.0 -3.5 -33.2
      Gasoline (all types) 1.2 3.1 -1.6 -3.4 -10.5 -20.6 -3.5 -33.8
      Fuel oil 1.0 1.1 -0.4 -8.5 -13.7 -15.6 -6.3 -37.5
    Energy services 0.2 -0.2 0.6 -0.3 -0.5 0.1 -0.5 -0.2
      Electricity 0.2 -0.2 0.4 -0.1 -0.2 0.1 -0.8 -0.2
      Utility (piped) gas service 0.5 -0.5 1.0 -0.9 -1.4 0.2 0.8 -0.3
  All items less food, energy 0.2 0.1 0.2 0.2 -0.1 -0.4 -0.1 1.2
    Commodities less food, energy -0.1 .0 .0 0.2 -0.3 -0.7 -0.2 -1.0
      New vehicles -0.1 0.1 .0 0.1 -0.4 .0 0.3 -0.3
      Used cars and trucks -0.7 -0.4 -1.2 0.4 0.8 -0.4 -0.4 -0.4
      Apparel 0.6 0.1 0.7 0.4 -2.0 -4.7 -2.3 -7.9
      Medical care .0 1.0 -0.6 -0.6 .0 -0.1 0.1 0.8
    Services less energy 0.3 0.2 0.3 0.2 .0 -0.4 .0 2.0
      Shelter 0.3 0.2 0.4 0.3 .0 .0 0.2 2.5
      Transportation .0 -0.1 0.3 0.3 -1.9 -4.7 -3.6 -8.7
      Medical care 0.4 0.3 0.3 0.3 0.5 0.5 0.6 5.9

 

The BLS tends to release inflation data around the middle of a month based on consumer prices surveyed in the previous month. The Consumer Price Index (CPI) for June and the latest annual period become public on July 14, 2020.

CPI data is used in calculating inflation rates and in this site’s U.S. inflation calculator. The US Inflation Calculator shows cumulative inflation and the change in buying power of the U.S. dollar over time.

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