The consumer price index (CPI), which measures changes in a multitude of goods and services, increased just 0.1% for the month of May, bringing the annual level down to 4%. That 12-month increase was the smallest since March 2021, when inflation was just beginning to rise to what would become the highest level in 41 years.
Excluding volatile food and energy prices, the picture isn’t as optimistic: core inflation rose 0.4% on the month and was still up 5.3% from a year ago, indicating that while price pressures have eased somewhat, consumers are still under fire.
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All of the metrics were exactly in line with the Dow Jones consensus estimates for May.
Markets showed little reaction to the release of the report this morning, despite its expected prominence in the decision the Federal Reserve will make at this week’s meeting regarding interest rates. Stock market futures were slightly positive, though Treasury yields fell sharply.
Pricing did shift in the fed funds market, with traders pricing in a 93% chance the Fed will not raise benchmark rates when its meeting concludes tomorrow.
Related: Bautis Financial Advisor Commentary: June 13, 2023
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Bautis Financial Advisor Commentary: June 13, 2023