The latest reading on inflation shows an overall easing in the pace of price increases.
The data released Wednesday (June 11) from the Bureau of Labor Statistics showed that the impact of tariffs has been benign, or at least they were in May.
But essential categories of spending — namely, food and shelter — got more expensive, underscoring the fact that U.S. consumers are still grappling with pressured pocketbooks and wallets, even if prices of some discretionary items declined.
By the numbers, the Consumer Price Index (CPI) increased 0.1% month over month, below April’s 0.2% increase. The newest report was favorable compared to economists’ estimates of a 0.2% monthly gain. On an annualized basis, the yearly CPI rose 2.4% in May.
Rising Costs of Shelter
The shelter index rose by 0.3% last month and was the primary contributor to the monthly increase. Despite this, the index increased by 3.9% over the last 12 months, marking the lowest annual rise since November 2021.
Rent followed a similar trend, increasing by 0.3% month-over-month and 3.9% annually. Meanwhile, the owner’s equivalent rent of residences rose by 0.3% last month and 4.2% compared to May 2024.
Some Relief Here and There
The energy index declined by 1% in May. It has fallen by 1.4% in 2025 and 3.1% compared to May 2024, after seasonal adjustments. Piped gas prices dropped by 1% in May, following a 12.1% increase during the first four months of the year. Gasoline prices also fell by 2.6% last month, marking the fourth consecutive month of declines.
In May, the food index rose by 0.3%, rebounding from a 0.1% decrease in April. Both major components, food at home and food away from home, increased at the same rate last month.
Stocking the Cupboard Is More Expensive
Overall, it cost more to stock up on some key items in the pantry. Among grocery items, cereals and bakery products saw the largest price increase (1.1%), followed by fruits and vegetables (0.3%). Conversely, prices for meat, poultry, fish and eggs continued their decline, dropping by 0.4% in May after a 1.6% decrease in April. Despite recent drops, this category has risen by 2.7% in 2025. Non-alcoholic beverages (-0.3%) and dairy products (-0.1%) also experienced price decreases in May.
Whatever respite might have been seen in May — where inflation was a nudge rather than a surge higher — could prove ephemeral.
Businesses surveyed by the Atlanta Fed earlier this month indicated that, among those seeing sales pressures, the assessment would be that they could pass along 45.6% of a cost increase. Those with sales levels that were about normal said they could pass through a little more than half of a cost increase.
There’s evidence, too, that firms would use price increases as a part of their near-term strategies. In the recent PYMNTS Intelligence report, “Tariffs and Business Uncertainty: The Current State of Play,” our data showed that 42% of goods firms and 21% of services firms said they planned to increase prices in response to tariffs.
