US CPI data for May released: Annual inflation rate accelerated for the first time in four months

The Bureau of Labor Statistics has released the US inflation numbers for May 2025. The annual inflation rate in the US accelerated for the first time in four months to 2.4% in May 2025 from 2.3% in April, but was below forecasts of 2.5%.

On a monthly basis, the CPI as expected, edged up 0.1%, below 0.2% in the previous month and forecasts of 0.2%. The index for shelter rose 0.3% and was the primary factor in the all-items monthly increase.

In contrast, the energy index declined 1%. Meanwhile, annual core inflation, which excludes volatile food and energy prices, remained at 2.8%, holding at 2021-lows, while expectations were pointing to a rise to 2.9%. The monthly core CPI also edged up 0.1%, below 0.2% in April and expectations of 0.3%.

The all items index rose 2.4 percent for the 12 months ending May, after rising 2.3 percent over the 12 months ending April. The all items less food and energy index rose 2.8 percent over the last 12 months.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent on a seasonally adjusted basis in May, after rising 0.2 percent in April. The index for all items less food and energy rose 0.1 percent in May, following a 0.2-percent increase in April.

On a monthly basis, the CPI as expected, edged up 0.1%, below 0.2% in the previous month and forecasts of 0.2%. The index for shelter rose 0.3% and was the primary factor in the all-items monthly increase. In contrast, the energy index declined 1%.

Tensions between the US President and the US Federal Reserve are escalating, with Powell stating no rate cut unless data shows otherwise, while Trump advocates for lower interest rates, and Powell expresses concerns about inflation.

There has been a change in how US CPI data is calculated. With the release of April 2025 data on May 13, 2025, the Bureau of Labor Statistics (BLS) will replace the survey data collected for the CPI’s leased cars and trucks index with transaction data purchased from a vendor to increase the accuracy of the index.

The next FOMC meeting is on June 17-18, where the summary of economic projections will also be released, showing the Fed’s dot plot.

US stock futures turned higher Wednesday after inflation came in softer than expected, boosting hopes for rate cuts. S&P 500 futures rose 0.4%, Nasdaq 100 gained 0.5%, and Dow futures climbed 130 points.

The report allayed fears that inflation would pick up speed again. The US-China trade talks’ development further improved sentiment.

Although the arrangement is pending final approval with President Xi, President Trump declared that China would provide the US with rare earths up front as part of a deal, describing the relationship as “excellent.” China will apply 10% tariffs, while the US will charge 55%.