Inflation in the US eased in May, an indication that price increases could be temporary

The inflation in the United States fell last month, an encouraging sign that the price rise that occurred at the beginning of the year could be temporary. The trend, if it continues, could lead the Federal Reserve to reduce your reference interest rate after increasing it to a maximum of 23 years.

The Underlying inflation — which does not include food and energy prices, which are more volatile — rose 0.2% from April to May, the government reported Wednesday.

That’s down from 0.3% recorded the previous month and the smallest increase since October. Compared to the same period last year, core inflation was 3.4%, down from 3.6% recorded last month.

Headline inflation also fell last month, with consumer prices unchanged from April to May, in part due to strong drops in the cost of gasoline, air tickets and new cars. Compared to the previous year, consumer prices increased 3.3%, compared to 3.6% the previous month.

Fed officials are examining inflation from month to month, trying to assess their progress in combating price increases. Even as inflation is generally easing, basic goods like food, rent and health care are much more expensive than they were three years ago, a continuing source of public discontent and potential threat to President Joe Biden’s re-election bid.

Most other indicators suggest that the economy is in good condition: Unemployment is low, hiring is robust, and consumers are traveling, visiting restaurants, and going to shows.

The US central bank has maintained its benchmark interest rate unchanged for almost a year after raising it rapidly in 2022 and 2023 to combat the worst inflationary outbreak in four decades.

Higher rates have led to increases in mortgages, car loans, credit cards and other types of business or personal loans. While inflation is well below the peak of 9.1% in mid-2022, it remains above the Fed’s target.

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