Inflation Update: Key Insights from the May 2023 Consumer Price Index

May 2023 Consumer Price Index

Introduction:

In the ever-changing landscape of the economy, one key indicator that helps us gauge the impact on consumers is the Consumer Price Index (CPI). The CPI measures the change in prices paid by consumers for goods and services over time. Recently, the U.S. Bureau of Labor Statistics released the CPI report for May 2023, providing valuable insights into the current state of inflation. In this blog post, we will delve into the key findings and trends revealed by the May 2023 CPI report.

Overview of the May 2023 CPI Report:

The CPI-U, which represents the Consumer Price Index for All Urban Consumers, rose by 0.1 percent in May 2023, following a 0.4 percent increase in April. Over the past 12 months, the all items index increased by 4.0 percent before seasonal adjustment.

12-month percentage change, Consumer Price Index

The 12-month percentage change in the Consumer Price Index (CPI) for selected categories provides insights into how prices have evolved over the course of a year. This data is reported on a not seasonally adjusted basis, meaning it does not account for seasonal variations.

Relative importance, and over-the-year and over-the-month percent change

Categories with higher weights have a greater impact on the overall CPI calculation, as they reflect a larger share of the average consumer's expenses.

Average price data (in U.S. dollars)

It refers to the representation of prices for goods or services in a specific currency.

Contributors to the CPI Increase:

Shelter emerged as the largest contributor to the monthly all items increase in May, followed by an increase in the index for used cars and trucks. The food index experienced a modest increase of 0.2 percent, while the energy index declined by 3.6 percent.

Food Index:

In May, the food index rose by 0.2 percent, with the food at home index increasing by 0.1 percent. Notably, the index for fruits and vegetables bounced back with a 1.3 percent increase following a decrease in April. However, the index for meats, poultry, fish, and eggs experienced a significant decrease of 1.2 percent, driven by a notable 13.8 percent decline in the index for eggs.

Energy Index:

The energy index witnessed a decline of 3.6 percent in May. This drop was primarily driven by a 5.6 percent decrease in the gasoline index. Other energy components, including natural gas and electricity, also experienced declines, while the fuel oil index fell by 7.7 percent.

All Items Less Food and Energy:

The index for all items less food and energy rose by 0.4 percent in May, mirroring the increases observed in April and March. The shelter index, a significant contributor, increased by 0.6 percent. Noteworthy increases were also observed in indexes such as used cars and trucks, motor vehicle insurance, apparel, and personal care. On the other hand, indexes for household furnishings and operations, as well as airline fares, witnessed decreases.

Inflation Trends:

The all items index showed a 4.0 percent increase over the 12 months ending in May 2023, the smallest increase since March 2021. The all items less food and energy index rose by 5.3 percent over the same period, while the energy index decreased by 11.7 percent. The food index experienced a 6.7 percent increase over the last year.

Conclusion:

The May 2023 Consumer Price Index provides crucial insights into the current state of inflation in the United States. While the overall increase in the CPI was modest, specific sectors such as shelter, used cars and trucks, and food experienced notable changes. 

Disclaimer: The information provided in this blog post is based on the May 2023 Consumer Price Index report released by the U.S. Bureau