Amidst ongoing economic fluctuations, understanding the intricacies of inflation is paramount for investors, policymakers, and consumers alike. The latest Inflation Review delves into the intricate dynamics shaping the current inflation landscape, providing valuable insights into key metrics and trends.
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The Consumer Price Index (CPI) increased by 0.1% month-over-month (MoM) in May 2025, a deceleration from the 0.2% MoM increase in April. Year-over-year (YoY), CPI inflation rose 2.4% in May, up from 2.3% in April. The May YoY figure is the lowest recorded since March 2025. A three-month annualized change in CPI shows a further deceleration, falling to 1.0% in May from 1.6% in April.
The prices of food were higher on a monthly basis with a rate of change of 0.4%. On an annual basis, food inflation was 2.3% which is the highest since January 2024 when it was 2.6%. Short-term rates of growth point to near-term price pressures that are higher than where they've been with the three month annualized rate of food inflation at 2.7% (above the YoY rate).
Energy prices were lower on a monthly basis with a rate of change of -1.9%. On an annual basis, energy inflation was -6.9% which is the lowest since July 2023 when it was -12.5%. Short-term rates of growth point to near-term price pressures that are lower than where they've been with the three month annualized rate of energy inflation at -10.0% (below the YoY rate).
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Core CPI (all items excluding food and energy) increased 0.4% MoM and 3.9% YoY in January 2024, unchanged than 3.9% YoY reported in December 2023. The annual rate is the lowest since December 2023 when it was 3.9%. In the short term, core CPI inflation appears to be accelerating as the three month change at an annualized rate of 4.0% in January 2024 was higher than the average annualized three month change in the previous three months which is 3.4%.
The core goods and services segments decreased -0.3% MoM and increased 0.7% MoM respectively. On an annual basis, goods inflation has been mostly unchanged at -0.3% YoY. The short-term rates of growth, the six month and three month annualized inflation rates, are -2.4% and -2.1%, respectively. On an annual basis, services inflation has been inflationary at 5.4% YoY. Its short-term inflation rates are 6.2% and 5.6%, respectively.