The headline CPI in May was unchanged from the previous month. The annual CPI increase is now 3.3%, down from 3.4% in April. The core CPI advanced 0.16% during the month, down from 0.29% in April. Annual core inflation eased to 3.4% from 3.6% in April. The PPI, which measures changes in sales prices received by domestic producers, fell in May.
The latest numbers suggest that the Federal Reserve's preferred inflation gauge, the personal consumption expenditures (PCE) price index, is likely to continue to move closer to its two percent inflation target. the Fed. This move would represent a faster decline than the Federal Open Market Committee (FOMC) projections. After a pick-up in the first quarter, inflation is now moderating more quickly than expected.
Stay tuned for updates this week on retail sales, homebuilder confidence and new construction.
Retail sales are expected to continue to decline. With little or no excess savings from the pandemic, inflationary fatigue and the prolonged high interest rate environment, consumer spending is likely to moderate further. While homeowners with near-record home equity and those with large amounts of financial wealth, a benefit of rising stock prices, still have healthy balance sheets, younger households, especially renters, they may be treading water. The New York Fed's latest credit and debt report indicates that rising delinquency rates are most concentrated among younger households: Generation Z and younger millennials.
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