Consumer prices in the United States eased in May for a second consecutive month, indicating a potential slowdown in the earlier acceleration of prices. This trend could bring the Federal Reserve closer to cutting its benchmark interest rate from its 23-year peak. However, the situation is different on Long Island, where the Consumer Price Index (CPI) climbed 3.9% last month compared to May 2023, slightly higher than April's 3.8% increase. In the nationwide context, prices excluding food and energy costs, known as the 'core' index, rose 0.2% from April to May, down from 0.3% the previous month and the smallest increase since October. On a year-over-year basis, core prices increased by 3.4%, lower than last month's 3.6% rise, marking the mildest increase in three years. The Federal Reserve is closely monitoring inflation data to assess progress in combating rising prices. Despite the overall moderation of inflation, essential items such as groceries, rent, and healthcare remain significantly more expensive than they were three years ago, posing a challenge for President Joe Biden's reelection bid [55d04ca0] [2d0e11b3].
Gas prices dropped by 3.6% in May, marking the largest monthly decline since November. The energy index decreased by 2%, driven by the drop in gasoline prices. Food prices saw a marginal increase of just 0.1% for the month. Shelter costs rose by 0.4% in May and were up 5.4% from a year ago. Motor vehicle insurance experienced a slight 0.1% decline in May but remained elevated with an annual increase exceeding 20% [2d0e11b3].
The Federal Reserve is keeping its key interest rate unchanged as it continues to combat elevated inflation rates. The central bank predicted a quarter-point fall in benchmark interest rates, signaling that the economy is moving in the right direction. However, there are still concerns about the economy, and inflation could tick up again. Wall Street predicts the first rate cut since 2020 will come in September [4234d7e9] [825cc5f9].
The stock market reacted positively to the CPI report, with futures climbing higher, while Treasury yields saw a decline. The report could make it easier for the Federal Reserve to justify cutting interest rates as early as September. The Federal Reserve's interest rate decision, scheduled for release on Wednesday afternoon, will be closely scrutinized in light of the CPI report [2d0e11b3] [825cc5f9].
In May 2024, the U.S. Consumer Price Index (CPI) showed no change, beating market predictions that anticipated a slight increase. Energy prices saw a significant monthly decrease by 2.0%, while on an annual basis, they increased by 3.7%. Food prices slightly increased by 0.1% in May, stabilizing after being unchanged in April. Gasoline prices decreased by 3.6%. Shelter costs continued to rise, contributing to the persistent inflation in the services sector, with a 5.4% annual increase. Transportation services experienced a reduction. The stabilization of the CPI has had a noticeable impact on the financial markets, particularly in the cryptocurrency sector where Bitcoin experienced a substantial surge, rising to $69,200. This increase nearly coincides with the CPI announcement. Analysts are closely monitoring these developments, as they could influence future monetary policy decisions by the Federal Reserve. Bitcoin reached $69,200, aligning with a broader trend in cryptocurrency markets reacting to economic indicators and investor sentiment towards inflation and monetary policy expectations [6763ed97].
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