Now we know -- consumer prices, as measured by the Consumer Price Index, actually declined in May. The summary, from Bloomberg:
Cheaper energy costs unexpectedly drove down the prices U.S. consumers paid for goods and services last month, the first decline since July 2004 and a sign inflation isn't an immediate threat to the economy.
The consumer price index fell 0.1 percent in May after rising 0.5 percent in April, the Labor Department said in Washington today. Core prices, not subject to larger fluctuations because they exclude food and energy, rose 0.1 percent in May, less than economists forecast...
So far this year, consumer prices are rising at a 3.7 percent annual rate compared with a 5 percent increase at the same time last year. Core prices are rising at a 2.4 percent annual pace, down from a 2.5 percent rate in the first five months of 2004.
Energy prices fell 2 percent in May after rising 4.5 percent a month earlier. Gasoline prices dropped 4.4 percent and natural gas costs fell 0.2 percent.
That sounds like pretty good news, but core inflation as measured by the median CPI from the Cleveland Fed actually moved in the opposite direction:
According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.3% (3.2% annualized rate) in May. The median CPI is a measure of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report...
Over the last 12 months, the median CPI rose 2.4%, the CPI 2.8%, and the CPI less food and energy 2.2%.
| Percent Change From Previous Month | ||||||
| Dec. | Jan. | Feb. | Mar. | Apr. | May | |
| CPI | 0.0 | 0.1 | 0.4 | 0.6 | 0.5 | -0.1 |
| CPI less food & energy | 0.2 | 0.2 | 0.3 | 0.4 | 0.0 | 0.1 |
| MEDIAN CPI | 0.2 | 0.3 | 0.2 | 0.2 | 0.2 | 0.3 |
| Percent Change, Last 12 Months | ||||||
| Dec. | Jan. | Feb. | Mar. | Apr. | May | |
| CPI | 3.3 | 3.0 | 3.0 | 3.1 | 3.5 | 2.8 |
| CPI less food & energy | 2.2 | 2.3 | 2.4 | 2.3 | 2.2 | 2.2 |
| MEDIAN CPI* | 2.3 | 2.4 | 2.4 | 2.4 | 2.3 | 2.4 |
Indeed not everyone was overly impressed by today's report. Returning to the Bloomberg article:
"Inflation has been moderate but there are still risks that it will accelerate,'' said John Shin, an economist at Lehman Brothers Inc. in New York. "Labor costs continue to trickle upwards and wage pressures are modest but rising, and that will keep the Fed'' raising its benchmark rate, Shin said...
"The drop should do little to fuel expectations that the Fed can pause anytime soon, as energy prices are now bouncing back,'' said Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado. ``Core year-on-year inflation remains at 2.2 percent and is continuing to trend higher at a modest but likely sustained rate.''
And here was the word from the Beige Book report on regional conditions from the Federal Reserve Banks:
Overall price pressures were moderate, but several reports noted concern over high fuel, transportation, and building materials costs.
It's still a wait and see situation.
Elsewhere in blogland: General Glut says the run of recent price statistics is telling us that we have nothing to fear from inflation but fear or inflation itself. The Capital Spectator is, I think, more ambivalent.