Inflation loosened its stranglehold on the U.S. economy in May, but a spike in the cost of rent kept prices painfully high for millions of Americans.
The Labor Department said Wednesday that the consumer price index, a broad measure of how much everyday goods like gasoline, groceries and rent cost, was unchanged in May from the previous month. Prices climbed 3.3% from the same time last year. Both of those figures are lower than the 0.1% monthly increase and 3.4% headline gain forecast by LSEG economists.
"Finally, some positive surprises as both headline and core inflation beat forecasts," said Robert Frick, corporate economist at the Navy Federal Credit Union. "There was relief at the pump, but unfortunately, home and apartment costs continue to rise and remain the main cause of inflation. Until those shelter costs begin their long-awaited fall, we won’t see major drops in CPI."
Here is a breakdown of where Americans are seeing prices rising and falling the fastest as they continue to wrestle with sticker shock.
INFLATION RISES 3.3% IN MAY, LESS THAN EXPECTED
Housing costs were once again the biggest driver of inflation last month, accounting for more than two-thirds of the total monthly increase, according to the report.
Rent costs rose 0.4% for the month and are up 5.3% from the same time last year. Rising rents are concerning because higher housing costs most directly and acutely affect household budgets.
Another data point that measures how much homeowners would pay in equivalent rent if they had not bought their home also climbed by 0.4% from the previous month.
RENT PRICES ARE STAGNATING, SUGGESTING HIGH INFLATION MAY STICK AROUND
"Shelter inflation remains sticky – it’s been growing steadily at a 0.4% rate every month for the past four months," said Elizabeth Renter, senior economist at NerdWallet. "It’s the foot-dragging characteristics of elements helping to keep the overall CPI elevated."
Food has been one of the most visceral reminders of inflation for many Americans, who saw prices tick higher in May after holding steady the previous month.
The cost of food climbed 0.1% last month and is up 2.1% from the same time last year. The food away from home index rose sharply by 0.4%, while the cost of groceries was actually flat. However, groceries cost 1% more than they did last year, and when compared with January 2021 – before the inflation crisis began – prices are up more than 21%.
Consumers paid more for a number of basics, including bread (1.1%), pork (0.9%), chicken (1%), oranges (1.6%), apples (0.7%), cereal (0.2%), lettuce (0.8%) and dried beans, peas and lentils (2.4%).
POWELL SAYS FED WON'T RUSH TO CUT INTEREST RATES UNTIL INFLATION IS CONQUERED
Some prices did fall last month, including for coffee, butter and margarine, rice, ham and fresh fish and seafood.
Energy prices fell in May for the first time in four months, easing some of the financial pressure that many families are enduring. Prices fell 2% during the month, thanks to a 3.6% decline in gasoline.
The price of propane, kerosene and firewood also dropped 0.3% in May, while fuel oil costs decreased by 0.4%.
The cooler-than-expected headline inflation figure in May is largely due to the "unusual drop" in gasoline prices, according to Bill Adams, chief economist for Comerica Bank.
"Gas tends to rise at the beginning of the summer driving season, but prices entered the spring elevated due to headlines about the war in the Middle East, and then dipped in May as demand came in weaker than expected," he said.
There was some good news for Americans looking to buy a new car in May.
FED'S FIGHT AGAINST INFLATION IS WEIGHING ON MIDDLE-CLASS AMERICANS
New car and truck prices fell again last month, dropping 0.5%. Prices are down 0.8% from the same time last year.
But the cost of used vehicles – which were a major component of the inflation spike in 2022 – rose in May for the first time in two months, climbing 0.6%. From a year ago, prices are down 9.3%.
There is another growing problem for car owners: insurance costs. Auto insurance premiums fell 0.1% in May, but prices are up a stunning 20.3% from the same time last year.
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Airline tickets fell again in May, sliding 3.6%.
The cost of tickets is down about 5.9% when compared with last year, according to the data.
