Preview: Due June 10 - U.S. May CPI - Energy and air fares to lead
We expect May CPI to increase by 0.5% overall and 0.3% ex food and energy, with respective gains before rounding being 0.527% and 0.253%, meaning that the core rate is a close call between 0.2% and 0.3% before rounding. The extent of the energy feed through to air fares may be the swing factor in the core rate.
April’s 0.4% core rate (0.376% before rounding) following two straight gains of 0.2% was inflated by a distortion caused by October’s CPI not having been measured due to the government shutdown. Some components of housing are updated only every six months, leaving the April data catching October’s changes as well. Housing CPI rose by 0.7% in April after two straight gains of 0.3% while owners’ equivalent rent rose by 0.5% after rising by 0.3% in March and 0.2% in February. Housing got an extra boost from a 2.4% rise in the volatile lodging away from home sector which may correct in May. We expect gains of 0.3% in housing and owners’ equivalent rent in May.
Gasoline prices rose at a slower pace before seasonal adjustment in May than in April but are likely to see a modest acceleration after seasonal adjustment, though still at a pace considerably slower than in March. We expect gasoline to lead a 4.3% increase in energy, versus 3.8% in April and 10.9% in March. Food faces upside risk on global supply disruptions, and we expect a rise of 0.4%, closer to April’s 0.5% than a flat March. We expect commodities ex food and energy to rise by 0.11%, which would be the strongest since September, led by a correction higher in autos. This could however be partly offset by a correction lower in apparel after three straight strong gains. The impact of tariffs is fading.
We expect services less energy to rise by 0.30%, slower than 0.50% in April that was inflated by the distortion in housing, but stronger than a 0.23% increase in March. There is risk for a significant acceleration in air fares which rose by 2.8% in April and 2.7% in March, neither exceptional monthly gains for what is a volatile component. In addition to risk of energy feed through, the closure of Spirit Airlines will reduce competition for low fare carriers. We also expect a modest pick-up in medical care after two weak months. We expect CPI excluding food, energy and shelter to rise by 0.24%, rounding down to 0.2% while CPI ex food and energy rounds up to 0.3%.
We expect yr/yr CPI to increase to 4.2% from 3.8% to reaching its highest since April 2023. We expect the yr/yr pace ex food and energy to edge up to 2.9% from 2.8%, which would be the highest since September 2025. October 2025 saw no CPI release due to the government shutdown.
