May 2025 CPI Report: Inflation Slows, Core Stays Elevated

The U.S. Consumer Price Index rose just 0.1% in May 2025, as falling energy prices helped offset gains in services and shelter. Year-over-year, headline inflation now sits at 2.4%, while core inflation—excluding food and energy—remains higher at 2.8%.

Key contributors to monthly inflation included shelter (+0.3%) and motor vehicle insurance (+0.7%), while gasoline and used vehicle prices declined. Food costs were mixed, with cereals and produce rising but protein categories falling.

The report suggests overall inflation continues to cool, but underlying price pressures in services remain sticky. This leaves the Federal Reserve in a holding pattern as markets look for confirmation of a broader disinflation trend.

Headline Summary

• Headline CPI: +0.1% MoM | +2.4% YoY
• Core CPI (ex. food & energy): +0.1% MoM | +2.8% YoY

Category Highlights

🏠 Shelter

• +0.3% MoM | +3.9% YoY
• Rent: +0.2%
• Owner’s equivalent rent: +0.3%

🥫 Food

• Total: +0.3% MoM | +2.9% YoY
• Cereals & bakery: +1.1%
• Fruits & vegetables: +0.3%
• Meats/poultry/fish/eggs: –0.4%
• Eggs: –2.7%

⚡ Energy

• Total: –1.0% MoM | –3.5% YoY
• Gasoline: –2.6%
• Natural gas: –1.0%
• Electricity: +0.9%

📉 Other Notables

• Motor vehicle insurance: +0.7% MoM | +7.0% YoY
• Airline fares: –2.7%
• Used cars & trucks: –0.5%
• New vehicles: –0.3%
• Apparel: –0.4%

Key Takeaways

• Headline inflation slowed thanks to lower energy prices.
• Core CPI remains above the Fed’s 2% target due to sticky services inflation.
• Shelter, insurance, and medical services are driving price persistence.
• Markets may view this as neutral to slightly dovish pending further Fed commentary.

Disclaimer: This summary is for informational purposes only and does not constitute investment or trading advice.