The Labor Bureau published its monthly findings on Tuesday, showing that inflation pushed its streak of slowing to 11 straight months. However, some prices are still rising, with others falling.
While the year-over-year rate fell from 4.9% to 4% this month, core inflation, which excludes food and gas prices due to their volatility, rose from 4.9% to 5.3%. The 0.4% increase has been the monthly average so far in 2023.
Core inflation is a broader measurement of most goods and is often used when determining if inflation is being “sticky,” as core prices often take longer to fall or rise.
Because of this, it isn’t known if the U.S. will hit the Federal Reserve’s target of a 2% inflation rate anytime soon. But the country’s current economic standing was enough to halt the bank’s interest rate increases after 10 straight months.
Food prices have remained mostly flat throughout the first six months of the year, and some consumer goods have been declining in price as well, playing a key role in the overall inflation rate falling, according to data from the Consumer Price Index.
The CPI also shows that another major contributor is energy prices, which have had an 11.7% year-over-year reduction.
But not everything is falling as shelter costs, which make up a third of the CPI, rose in May by 0.6%. Other housing-related costs to rise included property insurance, maintenance, and property taxes, according to chief Bankrate analyst Greg McBride.
The CPI is used for tracking goods and services that Americans typically buy. It is often heavily monitored by the Federal Reserve, as it plays a major role in determining core inflation.
With core inflation being one of the most telling statistics when it comes to where inflation is headed, experts like McBride warn that it currently shows inflation isn’t going anywhere for the time being.
“The journey to 2% inflation has been stuck in a holding pattern,” McBride told CNBC.
McBride shared that “sticky” core inflation occurs because of the “imbalance between demand and supply.”
To combat this, the Federal Reserve uses its interest rate hikes, meaning that though it decided to keep rates where they are this month, another rate hike could come in July if core inflation doesn’t fall.
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