Inflation slowed in May, hinting at welcome relief for consumers

Inflation in May was lower than expected, providing good news ahead of the Federal Reserve’s interest rate announcement. The Consumer Price Index report showed that consumer prices rose 3.3% from a year earlier, down from April’s 3.4% rate. Monthly prices remained flat for the first time since July 2022, largely due to falling gas prices. Economists were expecting a 0.1% increase in monthly prices and an annual gain of 3.4%. Core inflation, excluding gas and food, rose just 0.2% for the month, the slowest pace since October of last year. Despite the decrease in overall inflation, housing-related expenses continue to put pressure on Americans, with shelter inflation rising by 0.4% for the fourth consecutive month. Transportation services prices fell 0.5% for the month, while motor vehicle insurance prices dropped 0.1%. The Federal Reserve is likely to view the lowered inflation positively, but it is not expected to impact interest rates.