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Economy in Brief

U.S. Consumer Price Inflation Picks Up in May
by Tom Moeller  June 10, 2021

• Annual increase is strongest since August 2008.

• Core goods & services prices remain strong.

• Food prices are firm, but energy prices hold steady.

Price inflation at the retail level is firm. The Consumer Price Index rose 0.6% (5.0% y/y) during May following an unrevised 0.8% April gain. A 0.4% increase was expected in the Action Economics Forecast Survey. The CPI excluding food & energy rose 0.7% last month after strengthening 0.9% in April. The 3.8% y/y increase was the strongest since June 1992. A 0.4% May rise had been expected.

Part of the strength in the y/y price gains stems from the comparison to price declines last year when the recession took hold. Over the last six months, the CPI surged 5.9% (AR) and the core CPI strengthened 4.4%.

Goods prices excluding food & energy improved 1.8% (6.5% y/y) last month after rising 2.0% during April. Used car & truck prices remained strong, strengthening 7.3% (29.7% y/y) while new vehicles jumped 1.6% (3.3% y/y). Also strong were apparel prices which rose 1.2% (5.6% y/y) following little change over the prior three months. Furniture prices strengthened 0.9% (3.7% y/y) for the second straight month. Appliance prices rose 0.8% (6.9% y/y) and recouped all of the prior month's decline. Elsewhere, prices showed less strength. Recreation product prices rose 0.4% (3.5% y/y) after jumping 1.2% in April. Education & communication product costs also improved 0.4% (-1.4% y/y) after surging 3.1% in April. Medical care product prices edged slightly lower (NSA) and fell 1.9% y/y.

Services prices increased 0.4% (2.9% y/y) during May, about as they did during the prior two months. Transportation services prices surged 1.5% (11.2% y/y) as the cost of public transportation jumped 4.0% (15.9% y/y). Airline fares strengthened 7.0% (24.1% y/y). Recreation services prices rose 0.2% (0.6% y/y) after rising 0.8% for two straight months. Shelter costs rose 0.3% (2.2% y/y) as the owners' equivalent rent of primary residences increased a fairly steady 0.3% (2.1% y/y). Rents of primary residences gained 0.2% (1.8% y/y) for the fourth straight month. Education & communication services prices improved an increased 0.2% (2.2% y/y). Medical care services prices eased 0.1% following two straight months of little change. The y/y increase of 1.5% is down from 6.0% as of June 2020.

Food price inflation remained firm last month at 0.4% (2.2% y/y) for a second month. These gains were the strongest in a year. Food-at-home prices also rose 0.4%, but by a reduced 0.7% y/y. Meat, poultry & fish prices surged 1.4% (0.4% y/y) while egg prices rose 0.4% (-3.5% y/y). Dairy prices improved 0.4% (0.1% y/y) as cereal & bakery product costs rose 0.5% (0.6% y/y), strong for a second straight month. Fruit & vegetable prices held steady (3.2% y/y) following gains between 0.7% and 1.0% in each of the prior three months. Nonalcoholic beverage prices fell 0.5% (-0.2% y/y). Prices for food away-from-home rose 0.6% (NSA, 4.0% y/y).

Energy prices were little changed (+28.5% y/y), about the same as in April. These readings followed four straight months of strong increase. Gasoline prices fell 0.7% in May (+56.2% y/y) after a 1.4% decline. Fuel oil prices rose 2.1% (NSA, 50.8% y/y) and reversed most of the April decline. Natural gas prices strengthened 1.7% last month (13.5% y/y) while the cost of electricity rose 0.3% (4.2% y/y).

The Consumer Price Index data can be found in Haver's USECON database with additional detail in CPIDATA. The Action Economics survey figure is in the AS1REPNA database.

Consumer Price Index, All Urban Consumers (% chg) May Apr Mar May Y/Y 2020 2019 2018
Total 0.6 0.8 0.6 5.0 1.2 1.8 2.4
Total less Food & Energy 0.7 0.9 0.3 3.8 1.7 2.2 2.1
  Goods less Food & Energy 1.8 2.0 0.1 6.5 0.1 0.2 -0.2
  Services less Energy 0.4 0.5 0.4 2.9 2.2 2.8 2.9
 Food 0.4 0.4 0.1 2.2 3.4 1.9 1.4
 Energy -0.0 -0.1 5.0 28.5 -8.5 -2.1 7.5
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