CUNA Senior Economist Dawit Kebede issued the following statement in response to the Labor Department’s May Consumer Price Index (CPI) Report:
“The headline CPI increased 4% over the last twelve months in May, down from 4.9% in April. This is the largest decline in one month since prices started to come down from their peak. The decrease in energy prices contributed the most to this decline.
“Core inflation, which excludes food and energy items, increased 5.3% over the year, down from 5.5% in April. Housing and used car prices led the increase in May. Housing is a lagged indicator in the CPI measure, and it is expected to slow down in the second half the year, further contributing to the decline in core prices. The increase in used car prices in the last two months is expected to reverse as new car prices are declining and the supply is improving.
“This is an encouraging report for the Federal Reserve to pause the rate hike during the June meeting. The core inflation, excluding shelter, which the Federal Reserve tracks as a measure future inflation trend, has continuously declined in previous months.”