U.S. Consumer Prices Climb 0.1% in May; Annual Inflation Rises 1.8%

U.S. inflation was tame in May, for the most part, and slowed on an annual basis compared to the 12-months ending April, according to government figures released Wednesday, June 12, 2019.

Food prices bounced higher on the month and year while energy prices declined during both periods.

U.S. consumer prices increased 0.1% in May after climbing 0.3% in April, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a broad measure of what American consumers pay for everything from milk to medical care.

In key pricing categories:

  • Prices at the pump declined 0.5% after surging 5.7% previously. Gas prices dipped 0.2% from a year ago. The broader index for energy, which combines items like gasoline, electricity and fuel oil, fell 0.6% in May after rising 2.9% in April. Energy prices registered 0.5% lower year-over-year.

  • Food prices grew 0.3% last month after falling 0.1% previously, which was their first monthly decline since June 2017. Food prices rose 2.0% from a year earlier.

Excluding the more volatile food and energy components, so-called core consumer prices rose 0.1% for a fourth month in a row.

"The indexes for shelter, medical care, airline fares, education, household furnishings and operations, and new vehicles all rose in May," the Labor Department’s monthly report noted. "The indexes for used cars and trucks, recreation, and motor vehicle insurance were among those that declined over the month."

Shelter or housing costs moved ahead 0.2% following two straight monthly 0.4% increases, while their year-over-year level dropped a tenth to 3.3%. 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.

Used car and truck prices declined for a fourth month in a row, down 1.4% in May, while prices for new vehicles rose for a third straight month with the latest increase at 0.1%.

In the headline annual figure, U.S. inflation climbed 1.8% in the 12 months ending May, a smaller increase than the 2.0% advance in April. As recently as February, annual inflation at 1.5% logged in at the weakest rate since September 2016.

Core inflation rose 2.0% from a year earlier after advancing 2.1% in the 12 months ending May. The latest core rate matched the level in March which ranked the lowest since February 2018. This "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.

"It will be a tough task for Fed Chair Jerome Powell to continue to attribute weakness in inflation to transitory factors when he answers questions at the post-FOMC meeting press conference next week," said Yelena Shulyatyeva and Eliza Winger, Bloomberg Economics. "The latest CPI reading shows the monthly pace of core inflation extending its tepid streak, despite the key drivers of the recent deceleration — apparel and airfare prices — normalizing."

"This soft inflation backdrop reinforces our call for two (rate) cuts later this year," Reuters quoted Michael Feroli, an economist at JPMorgan in New York. "We think next week is probably too soon to expect that action, given that growth is still holding in and trade-related risks remain two-sided."

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 12, 2019. 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 2018 to May 2019 Consumer Prices – Gains & Losses in Percent

  Nov 2018 Dec 2018 Jan 2019 Feb 2019 Mar 2019 Apr 2019 May 2019 12 Month
All items .0 .0 .0 0.2 0.4 0.3 0.1 1.8
  Food 0.2 0.3 0.2 0.4 0.3 -0.1 0.3 2.0
    Food at home 0.1 0.3 0.1 0.4 0.4 -0.5 0.3 1.2
    Food away from home 0.3 0.4 0.3 0.4 0.2 0.3 0.2 2.9
  Energy -2.8 -2.6 -3.1 0.4 3.5 2.9 -0.6 -0.5
    Energy commodities -5.0 -5.7 -5.3 1.5 6.2 5.4 -0.4 -0.3
      Gasoline (all types) -5.2 -5.8 -5.5 1.5 6.5 5.7 -0.5 -0.2
      Fuel oil -2.9 -9.4 -1.3 2.6 2.1 1.3 -0.3 -0.8
    Energy services 0.2 1.5 -0.5 -0.8 0.3 -0.1 -0.8 -0.7
      Electricity 0.2 0.4 -0.6 -0.3 0.4 .0 -0.8 -0.2
      Utility (piped) gas service 0.2 5.1 -0.3 -2.4 -0.1 -0.8 -1.0 -2.6
  All items less food, energy 0.2 0.2 0.2 0.1 0.1 0.1 0.1 2.0
    Commodities less food, energy 0.2 .0 0.4 -0.2 -0.2 -0.3 -0.1 -0.2
      New vehicles .0 .0 0.2 -0.2 0.4 0.1 0.1 0.9
      Used cars and trucks 2.5 -0.5 0.1 -0.7 -0.4 -1.3 -1.4 0.3
      Apparel -0.6 .0 1.1 0.3 -1.9 -0.8 .0 -3.1
      Medical care 0.5 -0.4 0.1 -1.0 0.4 0.9 -0.4 -0.7
    Services less energy 0.2 0.2 0.2 0.2 0.3 0.3 0.2 2.7
      Shelter 0.3 0.3 0.3 0.3 0.4 0.4 0.2 3.3
      Transportation .0 -0.1 -0.2 -0.1 .0 0.1 0.1 1.1
      Medical care 0.4 0.4 0.3 .0 0.3 0.2 0.5 2.8

 

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 11, 2019.

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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