The US core consumer price index rose 0.2% in May 2024, a modest monthly increase that one market strategist interprets as a possible sign that inflation has peaked. The reading could reduce pressure on the Federal Reserve to continue raising interest rates aggressively.
What the latest CPI shows
The core CPI, which strips out volatile food and energy prices, climbed 0.2% from April. That’s a slower monthly gain than the 0.3% economists had generally expected. On an annual basis, core inflation still sits above the Fed’s 2% target, but the deceleration in the monthly pace is drawing attention.
Why a 0.2% increase matters
For months the Fed has been hiking rates to cool an overheating economy. Every tenth of a percentage point matters when policymakers are trying to gauge whether their efforts are working. A 0.2% monthly rise in core CPI is the smallest since late 2023, and it suggests that underlying price pressures may be fading. If that trend holds, the Fed could pause rate hikes sooner than many had expected.
The strategist’s take
Jan Szilagyi, a strategist at Natixis North America, said the May data looks like a signal that inflation has reached its peak for this cycle. In his view, that peak could give the Fed room to ease off on rate increases. Szilagyi’s interpretation doesn’t guarantee a policy shift—central bankers have repeatedly said they need to see a sustained pattern of lower inflation before changing course. But the 0.2% figure does strengthen the case for a hold at the next meeting.
What comes next
All eyes are now on the Fed’s June 11–12 policy meeting. Markets will be watching for any change in the language around future hikes. The next CPI report, due in July, will either confirm the trend or throw cold water on the peak-inflation narrative. Either way, the May core CPI has given both the Fed and investors something to think about—and maybe a little breathing room.
