US Inflation Eases in May as Consumer Prices Slow 🇺🇸

Inflation in the US showed signs of easing in May, with the Consumer Price Index (CPI) rising 3.3% annually, the slowest increase since July 2022. Monthly, CPI remained flat, driven by a drop in gas prices. Core inflation, excluding food and gas, rose 0.2% from April. The Bureau of Labor Statistics report, ahead of the Federal Reserve’s policy decision, suggests progress towards the Fed’s 2% inflation target. Markets responded positively, with Treasury yields falling. Despite the encouraging data, the Fed anticipates a gradual path to achieving its inflation goals, emphasizing ongoing economic challenges. The labor market showed resilience, with significant job additions and wage growth. However, the Fed’s preferred inflation gauge, the core PCE price index, remains particularly sticky, holding steady at 2.8% in April. Investors now anticipate fewer interest rate cuts in 2024, reflecting the complex economic landscape and the Fed’s higher-for-longer narrative on interest rates.