Annual Inflation in May: Down

The U.S. Bureau of Labor Statistics (BLS) released their monthly Consumer Price Index report on June 12^th 2019, for the 12 months through May 2019.

Annual Inflation is Down

Annual inflation in May was 1.79% down from 2.00% in April and 1.86% in March.
CPI Index was 256.092 up from 255.548 in April and 254.202 in March.
Monthly Inflation for May was 0.21%, April was 0.53%, March was 0.56%, May 2018 was 0.42%.
Next release July 11^th
Quantitative Tightening (QT) continues check it out here.
What is Quantitative Tightening?

Annual inflation for the 12 months ending in May was 1.79% (i.e. below the FED target of 2.00%) down from 2.00% in April. But still above the 1.52% of February. March was 1.86%. Inflation peaked at 2.95% in July 2018.

Monthly Inflation:

According to the BLS commissioner’s report, “The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in May on a seasonally adjusted basis after rising 0.3 percent in April, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.8 percent before seasonal adjustment.”

Since the peak in July 2018 the inflation rate began trending down from the top of the downward sloping channel toward the midline but March and April displayed a counter-trend rally with it moving back toward the top of the channel. May, however, had the inflation rate falling back below toward the mid-line of the channel. Read the full commentary here.

Current Inflation Chart

If we look at the shorter term chart we can see that over the last ten years there hasn’t been a decisive trend in either direction. As a matter of fact it looks more like it has gotten less volatile and is settling down in the middle of the road at the 2.00% FED target. Is it possible that after 100 years the FED has finally gotten the hang of managing inflation? Probably not, but…

Federal Reserve Actions

The Federal Reserve took a more active part in 2018 than it had in recent years both in raising interest rates and in eliminating the debt it acquired during its Quantitative Easing thus began its Quantitative Tightening (QT). QT continued throughout May despite its previous proclamations that it was going to follow a more easy money policy . See more information on Quantitative Tightening.

Quantitative Tightening (QT) Begins

For more info See NYSE ROC and MIP.

Seasonally Adjusted Inflation Table

From the table above we can see that on a monthly Seasonally adjusted basis most items were actually negative. Used Cars and Trucks were the biggest losers at -1.4%. On an annual basis apparel is down -3.1% while food away from home is up 2.9%

Inflation Forecast

See our Moore Inflation Predictor to see our current projections.

Not Seasonally Adjusted Monthly Inflation Rates

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2016	0.17%	0.08%	0.43%	0.47%	0.41%	0.33%	(0.16%)	0.09%	0.24%	0.12%	(0.16%)	0.03%
2017	0.58%	0.31%	0.08%	0.30%	0.09%	0.09%	(0.07%)	0.30%	0.53%	(0.06%)	0.00%	(0.06%)
2018	0.54%	0.45%	0.23%	0.40%	0.42%	0.16%	0.01%	0.06%	0.12%	0.18%	(0.33%)	(0.32%)
2019	0.19%	0.42%	0.56%	0.53%	0.21%

See: Monthly Inflation Rate for more information and a complete table of Unadjusted Monthly Rates.

Not Seasonally Adjusted Annual Inflation (by Category)

Category	Annual
All Items	1.79%
Food	2.0%
Energy	-0.5%
All Items less Food and Energy	2.0%
Apparel	-3.1%
New Vehicles	0.9%
Used Cars and Trucks	0.3%
Shelter	3.3%
Medical Care Services	2.8%
Transportation Services	1.1%

Regional Inflation Information

The U.S. Bureau of Labor Statistics also produces regional data. So if you are interested in more localized inflation information you can find it here.

Food and Energy Breakdown

The BLS publishes an index entitled “All items Less Food and Energy” which often causes people some confusion. It doesn’t mean they stopped including food and energy in the Consumer Price Index. It just means that they have broken them out so you can compare their increase to other components. For more info see What is Core Inflation?

Misery Index

The misery index as of June 2019 (based on the most recent official government inflation and unemployment data for the 12 months ending in May) is at 5.39% down from 5.60% in April.

It had reached a low of 5.32% in February 2019. But it was 6.87% in July 2018 and 7.44% in February 2017. [Read More…]

NYSE Rate of Change (ROC)^©

Unfortunately, after generating a buy signal in March the market has lost a bit of ground (less than 1%) but this puts the index and the moving average right on top of each other. So rather than getting a decisive cross we are getting mixed signals. This is very rare. Since 1990 it has never happened on a cross from below zero. The only similar situation happened in 2000 as the index moved from above zero to test the moving average and then began a series of failed tests ending in 2003. At this point we are not yet in that situation but cautious optimism is warranted.

See the NYSE ROC for more info.

Hold Signal! NASDAQ- ROC is currently below the moving average.

The ANNUAL rate of return for the NASDAQ ROC rebounded sharply in March to test its moving average… unfortunately it failed the test and remains below the moving average.

See NASDAQ ROC for more.

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