On its face, the May Consumer Price Index (CPI) shows progress in the fight against inflation. Prices, the way the Labor Department measures them, rose 1% over April and were up 4% compared to May 2022.
In June 2022, the CPI peaked at a 9% inflation rate so officially, inflation has nearly been cut in half over the last 11 months. But consumers are still feeling pain in some important areas.
The index for shelter was the largest contributor to the monthly increase, followed by an increase in the index for used cars and trucks. Those prices are rising again after a brief respite early in the year.
The food index increased 0.2% in May after being unchanged in the previous two months. The index for food purchased at grocery stores and consumed at home rose 0.1% over the month while the index for food away from home – mostly at bars and restaurants – jumped 0.5%.
Housing costs continue to push higher
The cost of shelter – mostly rent – rose 0.6% over April, continuing its steady increase. Year-over-year, the cost of putting a roof over your head is up 8%.
Personal transportation costs also continue to rise. The cost of used cars and trucks jumped 4.4% in May, matching April’s increase. Year-over-year, the cost of used vehicles is 4.2% lower.
New car prices dipped slightly – 0.1% – as inventory levels improved. However, on an annual basis, the cost of a new car is up 4.7%.
When it comes to food, it was much more economical to eat at home last month than go to a restaurant. Food purchased at grocery stores and prepared at home rose 0.1% after two months of declines. For the year, grocery costs are up 5.8%, a significant pain point for consumers.
Grocery prices are still expensive
The index for cereals and bakery products rose 10.7% over the 12 months ending in May. The remaining major grocery store food groups posted increases ranging from 0.3% for meats, poultry, fish, and eggs to 9.2% for other grocery categories.
The cost of eating out rose 8.3% over the last year. Checks at full-service restaurants rose 6.8% year-over-year while the tab for fast-food restaurants rose even higher – 8% over the last 12 months.
Energy was one of the few categories where consumers found relief last month. The energy index dropped by 3.6% in May after rising 0.6% in April. Gasoline prices provided the most relief, falling 5.6% in May and are down more than 19% from May 2022.
