May CPI report is out. Overall CPI MoM rose 0.1% in May vs. 0.4% in April while the core CPI MoM rose 0.4% in May vs. 0.4% in April. Overall CPI YoY rose 4.0% in May vs. 4.9% in April, 5% in March and 6% in February. Core CPI YoY rose 5.3% in May vs. 5.5% in April, 5.6% in March and 5.5% in February. Overall CPI YoY increase of 4% is the smallest 12- month increase since the period ending March 2021.
The table above indicates when there’s a significant decrease in energy index, the overall CPI will be significantly lower than the core CPI. The core CPI is quite entrenched and remains at an elevated level of ~0.4% MoM.The energy index fell 11.7% YoY. The gasoline index decreased 19.7% YoY, while the natural gas index fell 11.0% YoY. In contrast, the index for electricity rose 5.9% YoY.
Overall, I don’t think this report is very positive. The core CPI number doesn’t budge at all and if the energy index increases in the next few months, we will be back to square one. It is expected tomorrow the FOMC will keep the rates unchanged but I am not sure if the Fed is truly done with the rate hike based on the CPI report today.