Carried to a second decimal place, the CPI is better than reported this month. 
Better than Expected and Reported
The BLS CPI Report was better than expected in May with the BLS reporting a rise of 0.1 percent vs the Bloomberg Econoday expectation of 0.2 percent.
Carried to a second decimal point, May was even better than reported.
For example, in April and May the BLS reported shelter at 0.3 percent. Carried to two decimal places, shelter fell from 0.33 percent to 0.25 percent, a drop of 0.08 which curiously the BLS would round to a drop of 0.1 percent.
Similarly , the CPI fell from 0.22 percent (reported at 0.2) to 0.08 percent (reported as 0.1) for a drop of 0.1 percent. Carried to a second decimal place, the change was 0.14 percentage points lower.
This presumes the BLS measurements are accurate, but that is what we have to go on.
CPI Month-Over-Month Details as Reported
- The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent on a seasonally adjusted basis in April.
- The index for shelter rose 0.3 percent in May and was the primary factor in the all items monthly increase. [Emphasis Mine]
- The energy index declined 1.0 percent in May as the gasoline index fell over the month.
- The index for food at home and the index for food away from home also rose 0.3 percent in May.
- The index for all items less food and energy rose 0.1 percent in May, following a 0.2-percent increase in April.
- The medical care index increased 0.3 percent over the month, following a 0.5-percent increase in April. The index for hospital services increased 0.4 percent in May and the index for prescription drugs rose 0.6 percent. The physicians’ services index fell 0.3 percent over the month.
- The motor vehicle insurance index rose 0.7 percent in May, after rising 0.6 percent in April.
- The indexes for airline fares, used cars and trucks, new vehicles, and apparel were among the major indexes that decreased in May.
Impact of Shelter
Shelter is typically the primary factor in the CPI barring wild swings in energy because shelter is a whopping 35.45 percent of the CPI.
The report was not all good, especially medical care and insurance.
The upcoming PCE price report (the Fed’s preferred measure of inflation) may be worse than expected because it overweighs medical care and insurance relative to the CPI which overweighs shelter.
CPI Month-Over-Month Rent and OER
OER, Owners’ Equivalent Rent is the single largest component of the CPI with a current weight of 26.17 percent.
Rent of primary residence has a weight of 7.46 percent.
The BLS reported a decline in OER from 0.4 percent to 0.3 percent but carried to two decimal places the decline was 0.36 percent to 0.27 percent.
CPI and PCE Year-Over-Year Percent Change
CPI and PCE Year-Over-Year Details
- CPI: 2.4 Percent – May
- Core CPI: 2.8 Percent – May
- PCE: 2.1 Percent – April
- Core PCE: 2.5 Percent – April
PCE numbers for May are from the BEA not the BLS and have yet to be reported.
The Fed’s preferred measure of inflation is core PCE, currently 2.5 percent.
CPI Year-Over-Year Percent Change
CPI Year-Over-Year Details
- CPI: 2.4 Percent
- Core CPI: 2.8 Percent
- Rent of Primary Residence: 3.8 Percent
- Food and Beverage: 2.8 Percent
- OER: 4.2 Percent
Final Thoughts
This was a good report but with some unpleasant details on insurance and medical care.
Your results are highly likely to be much different.
The person most likely to match the CPI is retired, on Medicare, mostly eating at home and buying food on sale, with no kids in college they are paying for.
Does that shoe fit?
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This was a good report but we are not out of the woods.
We have yet to see the full impact of tariffs, the accompanied destruction of small businesses, or the inflationary impacts of Trump’s One Big Beautiful Bill (OBBB).
For discussion of OBBB please see At Least 20 Republican Senators Want Changes to One Big Beautiful Bill
It will take some wizardry or huge capitulation to thread this needle.
New construction in my area is still bonkers. A small (~12 current homes) semi-subdivision has a sign of high 400’s. I stopped in & spoke with the on-site listing agent & took a tour of one of their nicer homes. All of the homes are about 2400 SF.
Her sales book showed everything was priced from $520 to $545. I asked her if they’re doing rate buy downs, & she got excited & said that they just started that last week. Oh, I got it, so the builder added $30-40K to the home prices to cover his rate buydown. Nice! That’s awesome for the consumer who gets to finance that for 30 years.
Housing is in such bad need of a significant reset that it’s not even funny. The problem is that only comes via two outcomes: high 6%+ mortgages for a solid three or more years or a recession.
Health insurance, homeowner insurance, and car insurance are practically everything inflation wise. Almost everything else is fine.
For me add property taxes. Mine went up 25% last year, but that was because GA passed a law saying your taxes could only go up 3% a year max. So every county assessor beat the deadline by taking everyone’s assessment up to nearly 100% fair market value.
I looked two days ago, and my 2025 assessment still showed pending which is just idiotic. Up until three years ago, I would get my assessment by mid-April. Now, the county appears to be delaying as late into the year in hopes homes sales data supports the highest possible assessment for the selling season.
It’s just CRAZY!
The jury is still out on the effect of the tariffs on inflation. I wouldn’t celebrate just yet.
I never look at the press numbers (CPI-U adjusted). I look at the CPI-W 1984 unadjusted figures which are reported here: https://www.bls.gov/regions/northeast/data/consumerpriceindex_us_table.htm
The last 4 year over year readings are: 2.7, 2.2, 2.1, 2.2.
These readings suggest inflation bottomed out last month and is starting to go on the upswing again. The next few months will tell.
My health insurance premiums went up almost 20% on January 1st, along with higher co-pays as well. My used car is actually increasing in value (by-product of the tariffs) so that doesn’t bode well for car insurance rates.
My question on the inflationary impact of tariffs is this.
Tariffs are a tax. So if tariffs increase inflation than taxes also increase inflation.
About 12% of GDP is imports. So the tariff tax would be only on this amount of GDP.
Increases in personal tax rates (business passthroughs – as most small businesses are) and increases in corporate tax rates would also increase inflation. These would impact a much larger percentage of GDP that imports at 12%
Following that logic, decreases in tax rates for the above would reduce inflation.
Also regulations increase costs and are inflationary. So a reduction in regulations would decrease inflation.
Maybe the above is why the tariffs have not increased inflation.
Inflation means inflation of the money supply.
Taxes are remitted back to the Treasury and thus not inflationary.
Inflation is the emission of unbacked credit, as in deficit spending.
Deficit spending funds America’s trade deficits.
Of course taxes and tariffs will cause differential price effects, but not inflation in the aggregate.
AD = M*Vt. If the elasticity of demand changes, the overall price indices stay the same. The 73-74 oil spike is the paradigm (where the FED overcompensated).
Boy I wish you could say that again. Whom here has been talking about insurance and medical care (boomer+medicare = disaster) now for years?
It’s the reason I coined the phrase “It’s turtles all the way down and inflation all the way up!”
I cautioned people to use these “reprieves” in inflation to make strategic actions either with your personal investment portfolio, your food situation, or whatever you consider important (like medical care) because once these “good old days” are gone it will take a long time to get them back, maybe 2040 or beyond.
2030 is when all the boomers will be draining medicare and social security. Insurance and health care costs will soar to the moon. The clock is ticking, the debt is exploding and America ages into oblivion.
Don’t say you weren’t warned. Plan accordingly.
I do agree on the medical costs. Interestingly, most of the costs are administrative. I had to go for some testing and insurance denied. I decided to go ahead anyway and pay for it myself. They gave me a 75% discount.
Not sure how you would recommend to prepare with respect to medical costs or food. Stockpiling doesn’t seem to be a real alternative
Who says you have to stockpile food? Although not a bad idea. Why not stockpile equities in food companies? Everyone’s gotta eat and there are only 4 companies that control 80%+ of the meat production.
You will find similar results for other food staples, you just gotta do your homework.
Paying ‘cash’ is definitely the way to go. At a minimum you can float the idea of paying cash just to see what kind of price you’ll get. I have an HSA account and recently the misses needed some tests done (MRI type tests) that she was sure was going to cost a ton. We called around and said we had to pay cash due to no insurance and like you found out, we could get it done WAY cheaper and faster (just used the HSA card) rather than going though insurance (which I would have mostly paid for anyway since I would not be close to deducible for the year).
My mama told me you better shop around
https://www.youtube.com/watch?v=AQGXa3FiXKM
Cannot claim Turtles all the Way Down as your own though, unless you’re terrestrial Hindu god in which case apologies for underestimating you.
Sincerely,
Yertle
The best thing a person can do in relation to needing medical care is to do everything they can to remain as a healthy as possible for as long as possible. That is my strategy. An ounce of prevention is worth a pound of cure.
1) Keep stress to a minimum.
This one is the single most important step in my view. High stress often equals stress related binge eating/drinking and poor sleeping habits.
2) Eat healthy
3) Get some exercise
Don’t disagree but when you start to get old things just start breaking down. Most people will need some type of surgery, medicine or care at some point. The best way to find out what that is will be to get full diagnostics somewhere cheap or discover what you’re older relatives suffered from at that age.
I will question anyone to calculate his or her own inflation rate and confirm that is similar to what the government indicates.
A government thats untruthful?
I’m sure an individual person with opinions and biases is sure to report things 100% objectively, the sample size is just as big as if you sampled all the people. /s