Headline CPI eases up, especially on a monthly reading
Headline CPI for May printed at 4.0% y/y, lower than the consensus forecast of 4.1% y/y and lower than the previous 4.9% y/y. The monthly print impressed at 0.1%, which was lower than the previous months 0.4% and is under target at 1.21% on an annualised basis.
However, the core reading which includes volatile items such as food and energy proved resilient coming in at 0.4% m/m, which was the same as forecast. The y/y number did show some give, printing at 5.3%, which was softer than the previous 5.5%.
The direction of CPI will give the Fed some room to breathe, and a pause is likely this month. A continuation in the trend will further please the Fed and make further hikes this year unlikely, as previous increases finally pass through the transmission mechanism.
Energy prices experienced a decline of 3.6%, which played a significant role in the inflation release. Meanwhile, food prices witnessed a modest rise of only 0.2%.
The most substantial factor contributing to the overall increase in the headline CPI, was a 0.6% upsurge in shelter prices. It is noteworthy that housing-related expenses account for approximately one-third of the index's overall weight.
In other sectors, the prices of used vehicles remained unchanged, maintaining a steady increase of 4.4% since April. Additionally, transportation services experienced a moderate rise of 0.8%.
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
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