On Friday, the Bureau of Labor Statistics (BLS) dropped new data. It’s confirmation that U.S. consumer price index (CPI) inflation was 0.1% in May, a bust for analysts who expected a 0.5% increase. This slight uptick is a testament to continued economic rollercoastering and burst after-effects from contributions all across the economic spectrum. The 12 month inflation rate is currently 2.4% meaning consumer prices have increased modestly over the past year.
That report, released on Wednesday, showed that the core consumer price index—excluding food and energy—rose 0.1 percent. This key measure, which excludes volatile food and energy prices, is up at a 2.8% annual rate. Analysts had been expecting a bigger jump of 0.3% for the month and a 2.9% annual rate. That’s an indication that inflationary pressures may be weaker than they first anticipated.
Hence the sharp jump in food prices, up 0.3% in May. Shelter costs were noted as the “main culprit” driving the increase in total CPI, up 0.3% as well. This indicates that housing costs are still very much at the heart of the consumer concern and contributing heavily to inflationary trends.
Apparel prices registered minor decreases, with a 0.4% decrease over the same period. This makes the drop in clothing costs all the more striking. At the same time, very fundamental sectors such as food and housing prices are accelerating.
Former President Donald Trump’s tariffs have been largely ineffective at easing inflation. The most recent CPI data bears this out rather clearly. More encouragingly, the relatively modest increases in consumer prices are further evidence that inflation is not yet spiraling out of control.
The CPI provides a broad-based survey view of all types of products and services purchased across the entire U.S. economy. It provides some important clues about what consumers are spending on and America’s economic health. Economists and policymakers alike will be watching these trends closely. Their determinations will guide upcoming monetary policy and directly impact long-term economic growth.