US CPI gains slow to 4.0% in May
By Alexander Bueso
Date: Tuesday 13 Jun 2023
(Sharecast News) - The cost of living in the US rose by a tad less than anticipated last month.
According to the US Department of Labor, the country's Consumer Price Index advanced in May at a month-on-month pace of 0.1%.
That served to push the year-on-year rate of increase down from 4.9% to 4.0% (consensus: 4.1%).
At the core level meanwhile, which excludes the often volatile categories of food and energy, CPI was up by 0.4% over the month (consensus: 0.4%).
Food prices picked up a little versus April, rising by 0.2% after two flat monthly readings, while energy prices ratcheted lower again falling by 3.6%.
At the core level, used car and truck prices pushed up by 0.6% for a second month and shelter price gains reaccelerated to a monthly clip of 0.6% after a 0.4% increase in April.
Prices for commodities, excluding food and energy were up by 0.6% and those for medical care commodities by the same amount.
Medical care services on the other hand dipped by 0.1%.
Commenting on the latest CPI figures, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said there was a "good chance" that monthly core CPI gains would soon start printing at 0.2%.
Why? The biggest contributor to May's core CPI increase was rents - "as usual" - but the weighted average of primary/owners' equivalent rent rose by 0.5% for a third month running, after average increases of 0.7% over the prior six months.
But the downshift was tracking the numbers from the Zillow surveys which pointed to "steep" declines across the rest of 2023.
Furthermore, used vehicle prices, the second largest contributor to core inflation, jumped by 4.4% again, but were "likely" to begin decreasing over the summer, possibly as soon as June.
"Given that rents and used vehicles accounted for four-fifth of the increase in the May core, this signals a good chance of 0.2% core prints very soon."
-- More to follow --
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