May CPI Report: Inflation Rate Slower Than Expected  

TLDR

• Inflation rose by .1% in May, lower than expected (.3%).
• The annual rate is 2.8%, with 2.9% being the expected rate there.
• Tariffs don’t seem to be having any impact on the economy…yet.

Busted! We had so much going on last month that we completely forgot to post our CPI report. We hope we don’t get fired…

Anywho. The numbers, at least overall, were pretty good.

The Bureau of Labor Statistics (BLS) has just released the CPI report for May 2025. Time to pop open the hood and see what’s going on with the engine of this economy. 

That was bad. Won’t be using that one again. Let’s get after it.

Breaking Down the Key Figures 

The report revealed that the consumer price index rose by 0.1% for the month, resulting in an annual inflation rate of 2.4%. Interestingly, this result matched economists’ expectations for the annual rate but performed slightly below the month-over-month prediction of 0.2%. 

If you exclude volatile components like food and energy, the core CPI also rose by 0.1%, putting the annual core inflation rate at 2.8%. These figures were lower than forecasts, which had estimated a 0.3% monthly increase and a 2.9% annual rise. 

Source

Why does this matter? 

Core inflation provides a more accurate understanding of long-term pricing trends by excluding the more volatile costs of food and energy. A drop or moderation here often indicates broader stability in pricing pressures. 

Energy Prices Keep Inflation in Check 

Weakness in energy prices explains this modest CPI increase. Month-over-month, energy prices dipped 1%, with gas specifically down 2.6%. Compared to last year, gas prices are now 12% lower, providing financial relief to both businesses and consumers who rely on fuel to get to places like work…and the store…to buy insanely priced eggs. More on that below.

Power and natural gas prices remained relatively stable, while lower energy costs helped offset inflationary pressures in other areas. Simply put, that noticeable drop in gas prices? It’s contributing positively toward curbing inflation. We’ll take it!

You know what they say: A penny saved is a penny invested in crypto. By “they”, we’re talking about us. We’re the ones who say that.

Shelter Costs Rise Moderately 

Shelter, a major category in the CPI (and for anyone who pays rent), rose 0.3% in May, which BLS attributed as the primary factor in the overall increase. On an annual basis, though, shelter prices increased 3.9% — the lowest rate since late 2021. 

We should send our landlord a memo…

Price Drops in Vehicles, Apparel, and Eggs 

One unexpected turn involves categories such as new and used vehicles, apparel, and certain food items like eggs. 

• Vehicle prices declined 0.3% for new cars and 0.5% for used vehicles. 
• Apparel costs dipped 0.4%. 
• Egg prices fell by 2.7%, although they remain 41.5% higher than a year ago. 

These declines defy expectations…kind of. Some of these items were expected to increase in price due to tariffs and related supply chain issues. Instead, easing costs in these categories offered a little cushioning to the overall inflation picture. 

What Inflation Means for Crypto Users

Inflation is one of those economic indicators that affects nearly everyone and everything. Here’s what the May numbers suggest about where we stand and how this could affect decisions for businesses, consumers, and policymakers. 

Implications for Consumers 

If you’re filling your gas tank or shopping for a new car, things may feel slightly easier compared to earlier months. Lower energy and vehicle prices provide direct benefits to wallets, while slower increases in shelter costs could signal potential stability in rent prices. 

However, areas such as groceries and essential goods may continue to experience inflationary pressures. For example, while egg prices dropped in May, they are still way higher than they were last year. 

The Federal Reserve and Monetary Policy 

The Federal Reserve keeps a close eye on inflation, particularly measures like core CPI, to gauge how well they’re meeting their 2% inflation target. 

May’s data may offer a slight sigh of relief for policymakers who’ve been employing interest rate adjustments to control inflation. They kept rates steady last month. They’re set to meet again in a few days. We’ll see how it goes.

Lower-than-expected core inflation numbers could reduce the urgency for more aggressive rate hikes in future meetings. That said, the Fed tends to take a broad, long-term view and may look for further signs of sustained moderation before pivoting policy decisions.   

Inflation Trends in Context 

The modest changes in May align with broader patterns, suggesting that US inflation remains under control for now. Consumers and businesses benefit from the current plateau, while policymakers gain more room to maneuver without drastic adjustments. 

Historically high inflation rates seen in previous years seem to have passed, though lingering price pressures in specific categories (like food) emphasize the uneven healing process. 

Inflation and CPI numbers may sound dry, but they’re tied directly to everyday life decisions, from setting budgets to determining interest rates on loans. 

Key trends to monitor include:

1. Energy Prices: Will the dip in May sustain into upcoming months? 
2. Tariffs and Policy Effects: Any changes in trade policies could affect goods like apparel and vehicles. 
3. Food Costs: Watch for inconsistencies across subcategories (e.g., eggs down, but other grocery staples up). 
4. Fed Interest Rate Decisions: The Federal Reserve’s decisions will hinge on economic stability and inflation trends. 

Understanding inflation means staying informed about economic trends and their real-life applications. While May’s CPI report delivers mixed outcomes, the broader signs point to moderation and balance — for now. 

Are these trends sustainable? Time will tell. The best thing you can do is stay prepared by keeping an eye on crucial updates every month. Except, of course, when we drop the proverbial ball. Our bad on that.