Consumer prices recorded the smallest year-over-year gain in over two years in May, driven primarily by lower energy prices. May marked the eleventh consecutive month of price deceleration, but the NAHB noted core inflation remained persistent due to the increase in rent prices.
The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 0.1% in May on a seasonally adjusted basis, following an increase of 0.4% in April. Excluding the volatile food and energy components, the “core” CPI rose by 0.4% in May, as it did in April and March. Meanwhile, the food index increased by 0.2% in May with the food at home index rising 0.1%.
The index for shelter, which makes up more than 40% of the “core” CPI, rose by 0.6% in May, following an increase of 0.4% in April. Both the indexes for owners’ equivalent rent (OER) and rent of primary residence (RPR) increased by 0.5% over the month. Monthly increases in OER have averaged 0.6% over the last five months. These gains have been the largest contributors to headline inflation in recent months.
During the past twelve months, on a not seasonally adjusted basis, the CPI rose by 4.0% in May, following a 4.9% increase in April. This was the slowest annual gain since March 2021. The “core” CPI increased by 5.3% over the past twelve months, following a 5.5% increase in April. The food index rose by 6.7% while the energy index fell by 11.7% over the past twelve months.
