Inflation – sort of – nose-dived in May.
Posted on June 14, 2024

Wednesday’s news covered the lower-than-expected inflation for May. A couple of measures nose-dived. It’s just one month, though: the recent months still average closer to 4% inflation than 2% inflation. I display a table and the same six graphs that I use to follow the trends in inflation.

 

 

The two most widely-reported measures of inflation are Seasonally-adjusted inflation and Core inflation.

 

Seasonally-adjusted inflation declined slightly in April. This was sharp change from the last four months. The rate over the last six months aims at an annual rate of 3.4%.

 

 

Core inflation excludes volatile energy and food components. This is similar to the measure favored by the Federal Reserve (PCE). Inflation increased by 0.16% in May. We’d have to go back almost three years to find a monthly change that was lower. The last six months aim at an annual rate of 3.7%. Inflation for the last 12 was 3.4%.

 

 

Personal Consumption Expenditures (PCE) excluding Food and Energy is the measure of inflation that the Federal Reserve Board favors; it generally increases less than Core inflation. The graph shows the data ending April; the data for May is issued at the end of this month. Inflation was 0.24% in April and the last six aim at an annual rate of 3.2%. The last three aim at 3.3%. 12-month inflation was 2.8%.

 

 

== History of 12-month inflation ==

 

Full-year inflation measured by CPI-U shows that inflation for the last 12 months has been 3.3%.

 

 

== Producer’s Price Index ==

 

The change in producer prices will impact consumer inflation. PPI declined in May. PPI over the last six months is at a 1.7%. annual rate.

 

 

== Services ==

 

The last six months aim at an annual rate of 5.4%.

 

 

 

Conclusion: Monthly inflation in May was less than 0.2%. We’d have to go back almost three years to find a monthly change that low. The 12-month rate is 3.4%. However, we are still running closer to 4% inflation than 2%.