Inflation fell marginally in May 2024

Inflation fell marginally in May. Photo by Justin Sullivan/Getty Images abcnews.go.com

Slightly improving from the previous month, consumer prices increased 3.3% in May compared to a year earlier, exceeding projections made by experts. The information arrived hours before the Federal Reserve decides on whether to raise or lower its benchmark interest rate. Rising 3.4% over the year ending in May, core inflation—a closely watched measure that removes unpredictable food and energy prices—showcased substantial cooling from the previous month. Food prices rose 2.1% year ended in May, significantly behind the overall inflation rate.

The Fed has kept interest rates steady at their highest level since 2001 for more than a year, hoping that rising borrowing costs would restrict consumer demand, slow down economic activity, and lower prices. But price increases have essentially ceased and the economy has hummed along. A Friday employment report demonstrating the great economic resilience surpassed professional forecasts. Rising 4.1% for the year ending in May, average hourly wages reveal that workers's buying power has grown even as prices climb.

Economic output fell drastically at first in 2024 but continued growing steadily. The Federal Open Market Committee, which controls Fed interest rate decisions, stated last month that it does not want to cut rates unless it is certain that inflation is progressively falling.

Summary News: Inflation fell marginally in May

May's consumer prices rose 3.3%, above analysts' expectations, and core inflation exhibited a slowing down influence. Year-end food costs increased 2.1%, behind the general inflation rate. Since 2001, the Federal Reserve has maintained constant interest rates at their highest level in hopes that borrowing would limit consumer demand and drive down prices. Price increases have ceased, though, and the economy has maintained vitality. Employment numbers show that workers' buying power has grown even in face of growing expenses. The Federal Open Market Committee controls Fed interest rate choices; it does not want rates down unless inflation is regularly declining.

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Source: Inflation eased slightly in May, outperforming economists' expectations