Key Insights:
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Energy is driving the vast majority of short-term inflation: The energy index rose 3.9% in May and was the primary driver of the overall monthly increase, accounting for more than 60% of the total 0.5% bump in the CPI-U.
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Annual inflation continues to accelerate: The 12-month trailing inflation rate quickened in May, hitting 4.2% compared to the 3.8% annual rate reported just a month earlier in April.
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Core inflation remains much more stable than headline numbers: When you strip out volatile food and energy costs, "core inflation" (all items less food and energy) only rose 0.2% in May. Its annual rate sits at 2.9%, which highlights that skyrocketing energy costs—which skyrocketed 23.5% over the year—are heavily skewing the broader headline inflation number.
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The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5% on a seasonally adjusted basis in May, after rising 0.6% in April, the U.S. Bureau of Labor Statistics reported.
Over the last 12 months, the all items index increased 4.2% before seasonal adjustment. The index for energy rose 3.9% in May, after rising 3.8% in April and 10.9% in March. The energy index accounted for over sixty% of the monthly all items increase. The index for shelter also increased in May, rising 0.3%. The food index increased 0.2% over the month as the food at home index rose 0.1% and the food away from home index increased 0.3%.
Conversely, the indexes for motor vehicle insurance, household furnishings and operations, and new vehicles were among the major indexes that decreased in May.
The index for all items less food and energy rose 0.2% in May. Indexes that increased over the month include communication, airline fares, medical care, personal care, and recreation.
The all items index rose 4.2% for the 12 months ending May, after rising 3.8% for the 12 months ending April. The all items less food and energy index rose 2.9% over the year, following a 2.8% increase over the 12 months ending April. The energy index increased 23.5% for the 12 months ending May. The food index increased 3.1% over the last year.
