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**MNI 5 Things: US May CPI, Core Right On Expectations +0.2%>

--5 Things We Learned From The May CPI Data
By Kevin Kastner and Holly Stokes
     WASHINGTON (MNI) - The following are the key points from the 
Consumer Price Index data for May released by the Bureau of Labor 
Statistics Tuesday: 
     - May CPI rose 0.2% month/month, for both overall and core, right 
on analysts expectations, so the market reaction should be restrained. 
The headline gain was +0.209% before rounding. As highlighted in an MNI 
5 Things, analysts have a tendency to overestimate CPI in May, but they 
have a good track record of estimating core CPI. 
     - Core CPI was +0.171% unrounded, so on the low side of +0.2%. The 
large owners' equivalent rents category rose 0.2%, while lodging away 
from home prices jumped 2.9%, medical care prices rose 0.2% and new 
vehicle prices rebounded by 0.3% after a 0.5% decline in April. 
Providing some offset, apparel prices were flat and used vehicle prices 
fell 0.9%, continuing the string of declines. 
     - The y/y rate for headline CPI rose to 2.8% in May vs 2.5% in 
April, hitting the highest point since February 2012. At the same time, 
the y/y rate for core CPI rose to 2.2% from 2.1%, the highest since 
February 2017. Overall, the data suggest modest acceleration in 
inflation what will allow the FOMC to continue to its gradual rate hike 
     - The core CPI data are generally well forecasted by analysts, so 
today's data are in line with that trend. 
     - Energy prices rose by 0.9% for May after a 1.4% increase in 
April, with gasoline prices up 1.7%, but electricity prices up only 0.1% 
and gas utilities prices down 0.6%. Energy prices were up 3.6% 
unadjusted, so seasonal adjustment did subtract some of the strength. 
CPI excluding only energy was also up 0.2%, while food prices were flat. 
     ** MNI Washington Bureau: 202-371-2121 ** 

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