MNI BRIEF: US May CPI Offers Fed Some Relief; Supercore Dips
Headline and core CPI came in well below expectations last month.
U.S. CPI came in well below expectations in May, with headline nearly flat over the month and core up just 0.163%, compared to expectations for a 0.1% and 0.3% rise, respectively. Over the past 12 months, the increase in headline CPI slowed to 3.3% and core 3.4%, the Bureau of Labor Statistics said Wednesday. The 10-year Treasury yield fell 13 bps and the U.S. dollar slid to new weekly lows.
Shelter rose 0.4% for the fourth straight month, more than offsetting a 3.6% decline in gasoline. Core services outside of housing or "supercore" fell by 0.042% compared to its three-month average of 0.342%, according to an MNI calculation. Analysts had expected increases ranging from 0.3% to 0.5%.
The data should support the FOMC's view that disinflation has resumed after a sideways first quarter. Federal Reserve Chair Jerome Powell will lay out the committee's latest outlook after the two-day policy meeting concludes Wednesday afternoon. (See: MNI: Fed Dots Likely Split Between 1 And 2 Cuts This Year) Markets are still largely counting on the first rate cut to come in September or later.