May Prices Flatline, But Annual Inflation Up 3.3%

May’s Prices Hold Steady, But Annual Inflation Persists

The Consumer Price Index (CPI), a key measure of inflation, surprised some economists by remaining unchanged in May compared to April. This comes despite earlier predictions of a slight increase of 0.1%. However, year-over-year inflation remains a concern, with the headline CPI registering a 3.3% increase. Here’s a breakdown of the data:

Monthly CPI Changes (May 2024):

• Headline CPI: No Change (0.0%)
• Core CPI (excluding food and energy): Up 0.2%

Annual CPI Changes (May 2024 vs. May 2023):

• Headline CPI: Up 3.3%
• Core CPI: Up 3.4%

Breakdown of Price Changes (May 2024):

• Shelter (Up): Housing costs continued their upward trend, rising 0.4% in May, marking the fourth consecutive month of increases.
• Food Away From Home (Up): Eating out became more expensive, with both full-service restaurants (0.4% increase) and limited-service options (0.2% increase) raising prices.
• Medical Care (Up): The cost of medical care climbed again (0.5% increase), with prescription drugs (2.1% increase) and hospital services (0.5% increase) driving the rise.
• Used Cars and Trucks (Up): After a dip in April, the price of used vehicles rebounded in May, increasing by 0.6%.
• Education (Up): Educational expenses also saw a slight rise (0.4% increase) in May.

Price Decreases (May 2024):

• Gasoline (Down): Gas prices offered some relief to drivers, falling for the first time in months, with a decrease of 3.6%.
• Airline Fares (Down): Traveling by air became more affordable as airline fares dropped for the second month in a row, decreasing by 3.6% in May.
• New Vehicles (Down): The price of new cars and trucks dipped slightly in May, showing a 0.5% decrease.
• Other Categories (Down): Small price decreases were also observed in communication (0.3% decrease), recreation (0.2% decrease), apparel, and household items.

Year-Over-Year Inflation (May 2024 vs. May 2023):

While May’s flat CPI report offers some hope, the year-over-year picture remains concerning. Overall inflation sits at 3.3%, with housing costs leading the surge (5.4% increase in the past year). Other notable annual increases include car insurance (20.3% increase), medical care (3.1% increase), recreation (1.3% increase), and personal care products (2.9% increase).

The Takeaway:

May’s CPI report paints a mixed picture. While specific categories like gas prices saw some welcome declines, core expenses like housing and medical care continue to climb. It’s important to remember that these are average price changes, and your individual experience with inflation may vary depending on your spending habits.