#CPI inflation data came in cooler than expected, rising 0.1% last...
Sam Williamson@SWilliamsonEcon
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Jun 11, 2025
~1 min read
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#CPI inflation data came in cooler than expected, rising 0.1% last month and 2.4% over the last year. Goods prices were flat month-over-month, with tariff-sensitive items like autos and apparel seeing declines. Shelter remains the main driver, rising 0.3% m/m. While not enough for immediate Fed action, the report bolsters the case for rate cuts later this year—though tariff-driven inflation will stay in focus.
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Core CPI, which strips out volatile food and energy products, also came in cooler than expected, rising 0.1% last month and 2.77% year over year--the lowest level since March 2021. While this is a positive sign for policymakers, tariff-related price pressures are still a potential headwind over the summer, as more firms pass higher import costs to consumers.
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Food prices resumed their upward trend in May after a brief pause in April, continuing to rise year-over-year. In contrast, energy prices have declined annually, led by a 12% drop in gasoline prices.
New and used vehicles and apparel saw price declines, while others like A/V equipment and toys rise, continued to gradually rise, hinting at emerging price pressures from tariffs in some import-heavy commodities.
New and used vehicles and apparel saw price declines, while others like A/V equipment and toys rise, continued to gradually rise, hinting at emerging price pressures from tariffs in some import-heavy commodities.
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Shelter inflation continues to be the reason for last-mile holdup in the Fed's fight against inflation. The good news: home price growth has slowed to around 1.5% year-over-year. However, because the Shelter index reflects changes with a 12–24 month lag, it takes time for this moderation to show up in the data. Still, this trend points to continued easing in shelter inflation ahead—strengthening the case for rate cuts later this year and potentially giving the housing market a much-needed boost.
