Inflation in the US slowed to four percent in May, marking its lowest level since March 2021, according to the Bureau of Labor Statistics. This supports the Federal Reserve’s intention to conclude a series of aggressive interest rate hikes this week.
The Consumer Price Index (CPI) and core CPI, excluding food and energy prices, both experienced a four percent annual slowdown. Core CPI saw a consecutive increase of 0.4 percent for the third month, aligning with expectations, as reported by Bloomberg. Overall, CPI rose by 0.1 percent, largely due to lower gasoline prices.
This data arrives one day prior to the Fed’s decision on whether to raise interest rates for the 11th consecutive month or take a pause to assess economic conditions. The Fed closely monitors the growth of core CPI, which continues to rise at a rapid pace.
Several US monetary policymakers, including Fed Chairman Jerome Powell, have indicated a preference to postpone a new interest rate hike in June while still considering the possibility of future hikes in the coming months.
During the past month, the prices of used cars in the US have increased, while the costs of plane tickets and household products have declined. Excluding housing and energy, service prices rose by 0.2 percent.
Inflation in the USA stood at 4.9 percent in April
US inflation for April turned out slightly weaker than expected, signaling that the Federal Reserve’s cycle of rate hikes is effectively managing price growth.
As reported by the Financial Times, consumer price inflation dropped to 4.9 percent on an annual basis, marking its lowest level since April 2021. Economists had anticipated it to remain unchanged at five percent.
Core inflation, which excludes volatile energy and food prices, slightly decreased to an annual rate of 5.5 percent, in line with forecasts. The main CPI index rose by 0.4 percent on a monthly basis, while the core figure also increased by 0.4 percent.
The overall pace of price increases has significantly slowed down from the peak experienced last summer, which was the highest in 40 years. Fed Chairman Jerome Powell stated last week that interest rate hikes are approaching or may even be concluding.
The central bank’s reference rate rose from near zero at the beginning of last year to a range of five to 5.25 percent.
COMMENTS