US Inflation Accelerates in May, While Core CPI Softens

Summary

Bloomberg's Michael McKee breaks down the May US CPI report, showing headline inflation accelerating to 4.2% year-over-year as expected, while core CPI rose 0.2% month-over-month and 2.9% year-over-year. Key drivers included a 7% monthly surge in gasoline prices and a 0.5% jump in medical care services, while used cars and trucks contributed nothing. The data highlights persistent services inflation even as goods prices eased slightly.

• Headline CPI rose 4.2% y/y in May, matching economist forecasts.
• Core CPI increased 0.2% m/m and 2.9% y/y, in line with expectations.
• Gasoline prices surged 7% m/m, a major contributor to headline strength.
• Medical care services prices jumped 0.5% m/m after being flat the prior month.
• Apparel prices rose 0.3% m/m, similar to April's pace.
• Used car and truck prices were flat, no longer a significant inflation driver.
• Fed will focus on the services inflation component of the report.