- April CPI rose 3.3% over the last 12 months vs the expected 3.4%
- Over the prior month, CPI-U (CPI for All Urban Consumers) has remained unchanged on a seasonally adjusted basis, a deceleration from April's 0.3% month-over-month increase. That would also be the smallest month-over-month rise since October 2023.
- Energy prices fell in May on seasonally adjusted basis due to a decline in gasoline prices. This is a relief for consumers after gas prices had increased in April and March. Gas prices are likely to continue to decline in the near-term with the lowering of crude prices.
- Core CPI (Strips out the more volatile costs of food and gas) is 3.4% vs the expected rise of 3.5% over last year, which is a significant slowdown from the 3.6% annual increase seen in April and the 3.8% in March.
The economy would benefit drastically if the interest hike reached a peak, and started to turn around.
Loans are much less likely to go on to default as inflation comes down.
A study by credit agency TransUnion has shown that inflation pushes borrowers with low FICO scores to default. Default is always a concern for investors of lending institutions.
Fed chair Jerome Powell is more likely to cut the rate this year sooner than later as inflation comes down.
The CPI report, interest rate hikes, house prices and rents, wage growth, job openings, unemployment rate, international conflicts, and trade wars all play a significant role in guiding the market's microenvironment.
“In May, the Consumer Price Index for All Urban Consumers was unchanged, seasonally adjusted, and rose 3.3 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.2 percent in May (SA); up 3.4 percent over the year (NSA).”
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