The annual rate of US consumer inflation halved from nearly 3% in the period from July 2018 to February 2019, before it quickly increased back to 2%. However, “headline” inflation is known to be volatile and so the reference is often made to “core” inflation figures. This measure has mostly ranged between 2.00% and 2.30% in recent years, although its long term (since 1958) median has been 2.8%.
The latest consumer price index (CPI) figures released by the Bureau of Labor Statistics indicated seasonally-adjusted consumer prices increased on average by 0.1% in May, in line with the consensus figure but lower than April’s 0.3% increase. On a 12-month basis, the inflation rate slowed from April’s annual rate of 2.0% to 1.8%. The primary driver of the result was another increase in gasoline prices, with shelter costs (rents) the next largest factor.
Core inflation, a measure of inflation which strips out the volatile food and energy components of the index, also increased on a seasonally-adjusted basis by +0.1% for the month. As a result, the annual rate slipped to 2.0%, less than the 2.1% consensus figure and a little slower than April’s 2.1%.