Sequentially Soft Airfares/Car Insurance Helps Pull Down Core

The core CPI inflation pullback was, obviously, driven by a drop in core services outside of housing, ie supercore. See table below.

• Core services overall once again contributed more than 100% to the core CPI reading of 0.16% (at 0.17pp), with core goods again in slight deflation (subtracting 0.01pp from core CPI).
• Airfares subtracted 0.04pp alone from core CPI in the softest reading since July 2023; car insurance made no contribution BUT versus April, it made 0.07pp less of a contribution (and it was the weakest auto insurance inflation since Oct 2021).
• Lodging/medical services contributed about the same to core as they did before.
• Services outside of the major categories contributed nothing to core CPI, 0.05pp less of a contribution than in April.
• Note for core goods, used car inflation picked up a little more than expected, adding 0.01pp to core (vs -0.03pp last month). But this was offset elsewhere for the in-line core goods figure of 0.0% M/M (-slightly negative unrounded).
• Apparel pulled back as expected, to a 4-month low -0.3%, pulling down core by under 0.01pp.