Inflation Stays Hot

Talk of peak inflation appears to have been premature following the latest release of the CPI.

The Consumer Price Index rose 1.0% in May, and the core CPI, which excludes food and energy, rose 0.6%, according to the U.S. Bureau of Labor Statistics (BLS). The CPI and core CPI exceeded expectations of 0.7% and 0.5%, respectively, per Dow Jones Newswires.

Annually, the CPI hit a fresh 40-year high of 8.6% vs 8.3% in April, and the core CPI slowed to 6.0% from 6.2% in April.

The inflation narrative changed little over the last month. U.S. BLS data highlighted that inflation has moderated for most consumer goods, but services, food, and energy remain a big problem.

The Producer Price Index, which measures wholesale inflation, showed no signs of easing when it was last released a month ago—April data, U.S. BLS.

A Bloomberg News story early last week pointed out that some measures of semiconductors, shipping containers, and fertilizer prices have come down.

Business Insider noted that lumber prices have tumbled recently, but we’re not seeing anecdotal evidence of slowing inflation creep into the broad-based CPI in a major way.

Look at the graphic below. Inflation outside of food and energy has roughly held within a 0.5—0.6% range in seven of the last eight months. The temporary slowdown in March occurred primarily due to a steep drop in used cars.