BUSINESS + ECONOMY

US inflation cooled significantly in May — but it’s still not where the Fed wants it

Jun 13, 2023, 6:43 AM | Updated: Aug 13, 2023, 7:57 pm

A grocery-shopping guru joined KSL Podcast D2 to offer tips and advice on how to pinch your pennies...

SAN RAFAEL, CALIFORNIA - APRIL 12: Customers shop for eggs at a Sprouts grocery store on April 12, 2023 in San Rafael, California. (Photo by Justin Sullivan/Getty Images)

(Photo by Justin Sullivan/Getty Images)

Minneapolis (CNN) — US inflation is coming back down to Earth: Consumer prices in May rose at the slowest annual pace since March 2021, according to fresh data released Tuesday by the Bureau of Labor Statistics.

The Consumer Price Index, a key inflation gauge that measures price changes for a basket of goods and services, increased 4% for the year ending in May.

That represents a sharp pullback from April’s 4.9% and is slightly below economists’ expectations for a 4.1% gain, according to Refinitiv.

It’s the 11th consecutive month that inflation has slowed.

On a monthly basis, prices ticked up 0.1%. Economists were expecting prices to increase by 0.2% from April to May.

A drop in energy prices and a slowdown in food price hikes helped bring down the headline number, as did the influence of what is known as base effects: This time last year, inflation was marching upward and setting fresh 41-year highs before topping out at 9.1% in June.

When stripping out the more volatile components of food and energy, core CPI measured 5.3% for the year, slightly down from April’s annual reading. It ticked up 0.4% on a monthly basis.

The core readings are right in line with economists’ predictions, according to consensus estimates on Refinitiv.

The largest contributor to inflation is the shelter category, which economists expect will fall in the months ahead.

Shelter costs, as measured in the CPI, tend to lag more than other categories as the BLS collects rent data every six months and most rents don’t change too frequently. Private-sector data shows that apartment rents have fallen in recent months, suggesting an eventual cooldown in shelter prices will show up in the CPI.

Tuesday’s CPI report comes as Federal Reserve officials sit down for the first day of their monetary policymaking meeting and is one of the last major pieces of economic data to digest before they announce their rate decision on Wednesday.

Since March 2022, the Fed has increased its benchmark interest rate 10 consecutive times in an attempt to bring down historically high levels of inflation, but is widely expected to pause that hiking campaign this time.

Markets are currently pricing in a 94.2% probability that the Fed pauses on Wednesday, according to CME FedWatch.

This story is developing and will be updated.

 

We want to hear from you.

Have a story idea or tip? Send it to the KSL NewsRadio team here.

Business + Economy

Consumers who pay in cash used to get discounts. Now, it can cost you extra as we shift away from p...

Amanda Dickson

Want to pay cash? That might cost extra

Consumers who pay in cash used to get discounts. Now, it can cost you extra as we shift away from paying with cash in our society.

16 hours ago

On July of 2024, The Sundance Institute is bringing back to Utah the Sundance Film Festival films w...

Esme Sanchez Estevez

Free Sundance summer screenings return to Utah

Free Sundance Film summer screenings will be held in Park City, Salt Lake City, and West Valley City. 

4 days ago

Incumbent Gov. Spencer Cox, left, shakes hands with Utah Rep. Phil Lyman after Utah’s gubernatori...

Andrew Gordon

Cost of 2034 Olympic games addressed by Utah’s GOP gubernatorial candidates in debate

The 2034 Winter Olympic Games could cost around $4 billion, but there is a hope it won't cost Utah taxpayers anything.

5 days ago

Johnson & Johnson brand baby powder, one of several products at the center of lawsuits against the ...

Kyle Remund

State of Utah reaches settlement with Johnson & Johnson

Johnson & Johnson will be giving Utah and many other states a massive payout due to deceptive marketing practices for talc-based products.

5 days ago

Customers wait in line for Starbucks, the chain just announced new value meal options...

Mariah Maynes

Starbucks joins value meal race with new ‘Pairings’ options

Like its competitors, Starbucks is adding a value meal to boost sales. The coffee chain is calling them "Pairings."

5 days ago

FILE: A TRAX vehicle wrapped in Olympic imagery during a visit of the International Olympic Committ...

Tammy Kikuchi

Organizers reveal 2034 Olympics budget, total comes in slightly less than 2002

Utah hopes to be named as the host city for the 2034 games, and budget planning is already underway.

7 days ago

Sponsored Articles

Underwater shot of the fisherman holding the fish...

Bear Lake Convention and Visitors Bureau

Your Bear Lake fishing guide

Bear Lake offers year-round fishing opportunities. By preparing ahead of time, you might go home with a big catch!

A group of people cut a purple ribbon...

Comcast

Comcast announces major fiber network expansion in Utah

Comcast's commitment to delivering extensive coverage signifies a monumental leap toward a digitally empowered future for Utahns.

a doctor putting her hand on the chest of her patient...

Intermountain Health

Intermountain nurse-midwives launch new gynecology access clinic

An access clinic launched by Intermountain nurse-midwives provides women with comprehensive gynecology care.

Young couple hugging while a realtor in a suit hands them keys in a new home...

Utah Association of Realtors

Buying a home this spring? Avoid these 5 costly pitfalls

By avoiding these pitfalls when buying a home this spring, you can ensure your investment will be long-lasting and secure.

a person dressed up as a nordic viking in a dragon boat resembling the bear lake monster...

Bear Lake Convention and Visitors Bureau

The Legend of the Bear Lake Monster

The Bear Lake monster has captivated people in the region for centuries, with tales that range from the believable to the bizarre.

...

Live Nation Concerts

All the artists coming to Utah First Credit Union Amphitheatre (formerly USANA Amp) this summer

Summer concerts are more than just entertainment; they’re a celebration of life, love, and connection.

US inflation cooled significantly in May — but it’s still not where the Fed wants it