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Economy in Brief

U.S. Consumer Price Inflation Accelerates in May
by Tom Moeller  June 10, 2022

• Energy & food prices surge.

• Core price gain remains strong.

• Core goods prices & services prices both strengthen.

Retail pricing power heated up in May. The Consumer Price Index rose 1.0% last month following a 0.3% April increase. The 8.6% y/y gain was the strongest since December 1981. A 0.8% May rise had been expected in the Action Economics Forecast Survey.

Prices excluding food & energy remained strong, and rose 0.6% in May for the second consecutive month. The 6.0% y/y gain was below the March peak but remained up from a recent low of 1.3% y/y set in February 2021. A 0.5% May increase had been expected.

Energy prices led the price pick-up last month with a 3.9% rebound (34.6% y/y) after a 2.7% decline during April. Gasoline prices rose 4.1% (48.7% y/y) after falling 6.1% while fuel oil prices surged 16.9% (106.7% y/y). Natural gas prices strengthened 8.0% (30.2 % y/y) and the cost of electricity rose 1.3% (12.0% y/y).

Food pricing gained momentum last month. Prices rose 1.2% (10.1% y/y) after increasing 0.9% in the prior month. Dairy product prices surged 2.9% (11.8% y/y) and meat, poultry, fish & egg prices rose 1.1% (14.2% y/y). Cereal & bakery product prices also were strong and increased 1.5% (11.6% y/y). Fruit & vegetable prices improved 0.6% (8.2% y/y).

Services prices rose 0.6% (5.2% y/y) in May, roughly the same as in each of the prior three months. The cost of public transportation strengthened 8.6% (26.3% y/y). Shelter costs increased 0.6% (5.5% y/y). The owners' equivalent rent of primary residences gained 0.6% (5.1% y/y) and rents of primary residences rose 0.6% (5.2% y/y). The cost of medical care services increased 0.4% (4.0% y/y). Recreation services prices gained 0.5% (4.9 % y/y) while education prices edged 0.2% higher (1.7% y/y).

Goods prices excluding food & energy rose 0.7% (8.5% y/y) in May after a 0.2% April gain. Price changes within categories were mixed. Used car & truck prices strengthened 1.8% (16.1% y/y) and new vehicle prices rose 1.0% (12.6% y/y). Apparel prices rose 0.7% (5.0% y/y) as recreation product prices gained 0.1% (3.8% y/y). Home furnishings prices also rose 0.1% (9.7% y/y). Working lower, education & communication product prices fell 1.7% (-6.0% y/y) and household appliance prices weakened 0.7% (+6.4% 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.

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