Jun 13, 2023 - Economy

New report shows inflation cooling, but some prices remain high

Data: Department of Labor; Chart: Axios Visuals

The consumer price index rose 4% in the 12 months through May, while the measure that strips out food and gas prices rose 5.3%, the Labor Department said Tuesday.

Why it matters: Inflation has decelerated, but remains uncomfortably high for economic policymakers — the latest sign the problem is not yet over.

Details: Overall CPI cooled further from the 4.9% increase in the 12 months through April.

  • May's annual figure is a sharp decline from the peak 9% registered in June 2022.
  • Core CPI also slowed by this measure, decelerating from the 5.5% increase in the 12 months through April. Core CPI peaked at 6.6% last fall.

Between the lines: On a monthly basis, core inflation showed no signs of cooling, a troubling development for policymakers. It rose 0.4%, matching the pace of the previous two months.

  • Overall inflation, however, rose a mild 0.1%, slowing from the 0.4% increase in April.

Of note: A slump in energy prices was the major factor pulling down overall inflation, with a 5.6% decline in gasoline prices in May.

  • Gasoline is now down 19.7% from a year earlier, in the fallout of Russia's invasion of Ukraine.
  • Rent continued rising rapidly at 0.5% in May and 8.7% on a yearly basis.
  • However, economists believe that number is set to fade in the coming months as private sector indicators suggest falling rent growth.

What to watch: The Federal Reserve begins a two-day policy meeting on Tuesday at which it is expected to leave interest rates unchanged for the first time in 15 months, allowing more time to assess whether inflation is on a sustainable path downward.

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