The pace of inflation increased only slightly in May and the annual rate, while stubbornly high, registered at its lowest point in over two years, according to a report from the U.S. government released on Tuesday, June 13.
Food prices remained high while energy prices tumbled. Stripping food and energy, underlying pricing pressures continued at elevated levels. American consumers continued to feel the impact of prices for items like clothing, used cars, and shelter.
In the headline monthly figure, U.S. consumer prices in May edged up 0.1% compared to a 0.4% rise in April, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a closely watched inflation gauge that measures what Americans consumers pay for everyday items, ranging from clothing to cars.
For the month, overall food prices climbed 0.2% after remaining unchanged in both March and April. Within the food category, grocery prices rose by 0.1%, following a 0.2% decline in April. Additionally, the cost of eating out continued to increase, up by 0.5% compared to the previous month’s 0.4%.
Meanwhile, food inflation over the past year remained elevated at 6.7%, but down from 7.7%. During the same period, grocery prices increased by 5.8%, while the cost of food consumed outside of the home increased by 8.3%, compared to their respective previous rates of 7.1% and 8.6%.
In other areas, prices at the pump dropped by 5.6% in May, following a 3% increase in April. On a year-on-year basis, gas prices declined by 19.7%, compared to a 12.2% previously. To provide some perspective, the highest level of gasoline inflation in the past year occurred in the 12 months ending in June 2022, when it reached 59.9%, the highest level since March 1980.
The broader index for energy, which includes items like gasoline, electricity, and fuel oil, fell 3.6% in the month of May, after rising by 0.6% in April. Energy prices year-over-year decreased by 11.7%, even lower than previous 5.1% fall.
Excluding the more volatile food and energy components, the rate of core consumer prices rose by 0.4% in May for a third straight month.
Shelter or housing prices picked up by 0.6% in May, up from 0.4% in the prior month, and showed a sizable year-over-year increase of 8%. For some recent comparisons, they advanced 8.1% in April and jumped 8.2% in March, marking their largest 12-month jump since June 1982.
"The index for shelter was the largest contributor to the monthly all items increase, followed by an increase in the index for used cars and trucks," the Labor Department’s monthly report said.
Components of shelter include prices of items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. This index accounts for about one-third of the entire CPI.
In other closely watched pricing categories:
- Clothing prices rose 0.3% for a third month. They increased 3.5% from a year ago.
- New vehicle prices decreased by 0.1% in May after falling 0.2% in April, when they broke a streak of 23 straight advances. Nevertheless, they still increased by 4.7% year-over-year.
- Prices for used cars and trucks rose by 4.4% for a second month. Before then, they marked nine consecutive monthly declines. Compared to prices from a year ago, they have decreased by 4.2%. This is in stark contrast to February of last year when they had a soaring year-on-year pace of 41.2%.
- Compared to a year earlier, airline fares sank by 13.4% after declining by 0.9%. In May, they fell 3% following a decline of 2.6% in April.
In terms of the headline annual figure, inflation increased by 4% from a year earlier, which is slower than the 4.9% rate reported previously. This represents the smallest inflation rate since March 2021. For some perspective, the highest inflation rate in the past year occurred in the 12-month period ending in July, which was at 9.1% — the fastest rate of inflation since November 1981. Additionally, until March of this year, inflation rates had been at or above 6% for seventeen consecutive months.
Meanwhile, core inflation increased by 5.3% over the past year, down from 5.5% previously. The core, "all items less food and energy" index is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) to guide the central bank in setting its key interest rate. As recently as September, the core inflation rate at 6.6% was the highest since August 1982. Many economists consider the core reading as a better predictor for future inflation.
"The drop in year-on-year inflation may give the Fed license to slow the pace of tightening, but not to pause long term unless participants are convinced inflation will slow further," MarketWatch quoted chief economist Chris Low of FHN Financial.
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 13, 2023. 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 2022 to May 2023 Consumer Prices – Gains & Losses in Percent
(Seasonally Adjusted from Prior Month and Unadjusted 12-Month)
|Nov 2022||Dec 2022||Jan 2023||Feb 2023||Mar 2023||Apr 2023||May 2023||12 Month|
|Food at home||0.6||0.5||0.4||0.3||-0.3||-0.2||0.1||5.8|
|Food away from home||0.5||0.4||0.6||0.6||0.6||0.4||0.5||8.3|
|Gasoline (all types)||-2.3||-7||2.4||1||-4.6||3||-5.6||-19.7|
|Utility (piped) gas service||-3.4||3.5||6.7||-8||-7.1||-4.9||-2.6||-11|
|All items less food, energy||0.3||0.4||0.4||0.5||0.4||0.4||0.4||5.3|
|Commodities less food, energy||-0.2||-0.1||0.1||0.0||0.2||0.6||0.6||2|
|Used cars and trucks||-2||-2||-1.9||-2.8||-0.9||4.4||4.4||-4.2|
|Services less energy||0.5||0.6||0.5||0.6||0.4||0.4||0.4||6.6|
The BLS releases inflation data around the middle of the month for consumer prices surveyed up to the previous month. The Consumer Price Index (CPI) for June and the latest annual period will be made public on July 12, 2023.
The CPI data is also used to calculate inflation rates and to power this site’s U.S. Inflation Calculator. The U.S. Inflation Calculator displays the cumulative inflation and the change in the buying power of the U.S. dollar over time.