US CPI data for May released, focus now on Fed chief Powell in FOMC meeting today

US inflation numbers for May have been published. The Bureau of Labor Statistics released May 2024 CPI data on June 12, 2024, at 8:30 A.M. Eastern Time.

The annual inflation rate in the US slowed to 3.3% in May 2024, below 3.4% in April and forecasts of 3.4%. Compared to the previous month, the CPI was unchanged, also below expectations of a 0.1% rise, as a decline in gasoline prices was offset by a rise in shelter costs.

Meanwhile, core inflation slowed to 3.4% annually, lower than consensus of 3.5% and the monthly core inflation rate fell to 0.2% from 0.3%, also better than forecasts of 0.3%. The annual core consumer price inflation rate in the United States, which excludes volatile items such as food and energy, eased to 3.4% in May 2024, down from 3.6% in the prior month and below market forecasts of 3.5%

The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in May on a seasonally adjusted basis, after rising 0.3 percent in April, the U.S. Bureau of Labor Statistics reported today. The all items index rose 3.3 percent for the 12 months ending May, a smaller increase than the 3.4-percent increase for the 12 months ending April.

The index for all items less food and energy rose 0.2 percent in May. The index for all items less food and energy rose 3.4 percent over the past 12 months.

As a crucial gauge of the state of the economy, US CPI data is closely watched by investors worldwide. The US central bank is still concerned about the stickiness even if US inflation decreased from a peak of 9.1% in June 2022 to 3.4% in April 2024. The US CPI has averaged 3.2% for the past six to eight months. The US Fed has made it clear that a rate cut won’t occur until the country’s CPI falls to 2%.

In April, the US CPI increased 0.3 percent on the monthly count while annual inflation rose by 3.4%, a smaller increase than the 3.5-percent increase for the 12 months ending March. The core inflation index (all items less food and energy) rose 0.3 percent in April, while the annual core inflation index rose 3.6 percent over the past 12 months.

If cooler inflation continues, the Federal Reserve may consider cutting its key interest rate later this year. The Federal Reserve is seeking economic data, particularly inflation reports, to confirm consumer prices are on track to a 2% annual rate before cutting interest rates. The central bank has maintained its key fed funds rate at a 23-year high since July, aiming to slow the economy and curb inflation.

US Fed’s FOMC meeting is underway and the Federal Reserve Chief Powell is expected to announce no change in the policy rates on June 12 at 8 PM ET.