CPI inflation continues to rise despite slowing economy

In the United States, the Bureau of Labor Statistics reported an increase in the Consumer Price Index (CPI) inflation for May, marking its rise for the second consecutive month. The year-over-year CPI change was noted at 2.4 percent, a slight increase from April's 2.3 percent. The month-over-month change was recorded at 0.1 percent, indicating minor but significant growth; this was the smallest increase since mid-2024, aside from March of this year. Shelter prices saw a notable increase of 3.9 percent year-over-year, while services, excluding energy, rose by 3.6 percent. Furthermore, the core CPI measure, which excludes food and energy prices, showed no month-over-month decrease for 61 consecutive months, remaining stable at a 2.8 percent increase compared to April. Although the Federal Reserve’s preferred measure, the Personal Consumption Expenditures (PCE) inflation, recorded a rate of 2.5 percent in April, the latest CPI and core CPI figures suggest a potential eighth consecutive month of persistent price inflation, challenging the Fed’s goal of sudden economic stabilization by reducing inflation to two percent. Despite indications of decreasing disposable income among Americans, which may exert downward pressure on prices, overall price inflation has continued to trend upward, refusing to revert to stable levels. Moreover, average hourly earnings have only increased by 21 percent since early 2021, falling behind the consumer price rise. Signs of economic stagnation have emerged, evidenced by rising delinquency rates on credit cards, auto loans, and student loans, reaching levels not seen since the Great Recession. As the economy faces declining home prices, there is speculation about potential Federal Reserve interest rate cuts aimed at stimulating growth, but experts assert that these measures may prove ineffective against the ongoing economic downturn.