The Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose 0.2 percent in May, down from 0.4 percent in April. The CPI index is up 3.6 percent since May 2010, largely due to higher food and energy prices. However, this month, there was a reprieve for on energy prices, with the cost of petroleum down in recent weeks. The energy index declined 0.1 percent in May, its first decline since eleven months. Food and beverage prices were up 0.4 percent, led by higher costs for cereals, meats, fruits and vegetables, and sugars.
Core inflation, which excludes food and energy costs, was up 0.3 percent – the largest increase since July 2008. This translates into a 1.5 percent increase in core inflation over the past year; this figure has been trending up in recent months, a sign that consumers continue to get squeezed in their pocketbooks. The largest price increases were seen in lodging away from home (up 2.9 percent), apparel (up 1.2 percent), and new motor vehicles (up 1.1 percent).
Despite the moderation in prices this past month, higher costs for food and energy continue to chip away at consumer spending. Yesterday, for instance, the Census Bureau released new data on retail sales, which were down 0.2 percent. It is not hard to see why, with energy prices up 21.5 percent and food prices up 3.5 percent over the past year.
Chad Moutray is chief economist, National Association of Manufacturers.