Us Cpi Inflation Declined In May

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Us Cpi Inflation Declined In May

Us Cpi Inflation Declined To 3.3% In May

In the USA, a key indicator for measuring inflation is the CPI or the 'Consumer Price Index.' For the month of May, the US CPI declined to around 3.3% y/y against April's reading of 3.4%.

The data released by the US Bureau of Labor Statistics (BLS) showed the disinflation trend in the country is on track. What's even more interesting is that the reading was even lower than the forecast of 3.4%.

Core Cpi Turns Higher In May

While the US CPI has softened during May, the core CPI, which doesn't include the energy & food prices, actually moved higher to 3.4%. Once again, this was below the 3.6% reading in April and even lower than the 3.5% forecast made by the economists.

If we look at the CPI on a m/m basis, there was no change at all during May 2024. However, the core CPI has gone up by 0.2% on a m/m basis during May 2024.

After the release of the US CPI, the greenback came under selling pressure against the other major currencies, such as EUR, GBP, & others. For now, the US Dollar Index (DXY) is trading near 104.50 with a change of -0.73% for the day.

If we look at the EUR/USD, it has now reached fresh tops after the release of the US CPI. Similar moves are seen in other dollar pairs as well, and the CPI release for May has increased the odds of a rate cut in the year 2024.

If we compare the recent y/y reading with the target of 2.0%, there's still a long way to go. Overall, there's a difference of 1.3% between the current reading and the Fed's inflation target.

So, even if the CPI continues to decline by 0.1% every month, it will still take 14 months to reach the target. Similarly, a decline of 0.2% on average means it will take at least seven months to reach the inflation target.

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