EIB #15 - Inflation Was Minimal in May
On today's CPI inflation report, and suggested messaging.
All,
In today’s EIB, please find:
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Best,
Chris
Key Takeaways from Today’s Consumer Price Index (CPI) Report
At 8:30am ET, the BLS announced that CPI inflation was minimal in May.
Headline CPI inflation: 0.08% m/m (vs. Cleveland Fed nowcast of 0.13% m/m)1
Core CPI inflation: 0.13% m/m (vs. Cleveland Fed nowcast of 0.23% m/m)2
As a result of these monthly increases:
Headline CPI inflation: 2.38% y/y (up from 2.33% last month)3
Core CPI inflation: 2.76% y/y (down from 2.78% last month)
In a related report, the BLS announced that average wages rose faster than prices.
Real average hourly earnings: 0.3% m/m (1.4% y/y)
Real average weekly earnings: 0.3% m/m (1.5% y/y)
On the news, stock market futures edged up and the 10-year yield edged down.
Suggested Messaging
Today is a fine day for messaging.
CPI inflation was slower this month than economists generally expected.
12-month inflation was lower than almost every month under Pres. Biden.
Average wages are rising faster than prices, increasing workers’ purchasing power.
The S&P 500 closed at 6039 yesterday, moving closer to its all-time high of 6144.
The Atlanta Fed’s GDPNow model expects turbo-charged growth in Q2 (3.8%).4
Upcoming Data Releases
June 18, 2:00pm ET. The Federal Reserve announces its monetary policy decision. The current target range for overnight interest rates is 4.25% to 4.50%. Owing to solid job growth, above-target inflation, and high uncertainty about tariffs, options markets are pricing a nearly 100% chance that the Fed will keep the target range unchanged.
June 26, 8:30am ET. The BEA will release its “third” estimate for Q1 real GDP growth. The current estimate is -0.2%.5 From a messaging perspective, the key question is whether the BEA will revise real GDP growth into positive territory.
July 3, 8:30am ET. The BLS will release the jobs report for June 2025.
m/m = month-over-month. y/y = year-over-year. Data in this section are seasonally adjusted.
“Core” inflation excludes the volatile food and energy categories. It gives a quick rule of thumb for where inflation may be headed over the medium term. Of course, food and energy prices are important, and are included in the Fed’s 2% annual inflation target.
The y/y inflation rate slightly rose despite the minimal m/m inflation rate in May. This is because of the calculation of y/y CPI, which also depends on the CPI from 12 months ago.
Seasonally adjusted annualized rate.
Seasonally adjusted annualized rate.