Inflation cooled slightly in May, but it did not lead the Federal Reserve to change course on rates.
The annual inflation rate dropped from 3.4 percent in April to 3.3 percent last month, according to the latest data from the Bureau of Labor Statistics released Wednesday.
The data was released as the Federal Open Market Committee was meeting Tuesday and Wednesday to consider the federal target interest rate. The Federal Reserve continued its pause in hikes on rates for sixth straight meeting in March, keeping its target rate between 5.25 and 5.5 percent.
The pause in rate hikes followed the Federal Reserve’s aggressive approach to rein in inflation, which peaked above 9 percent. The Fed raised rates by 525 basis points since early 2022.
At its meeting in March, members of the Federal Open Market Committee had projected rates to drop to 4.6 percent by the end of the year and 3.9 percent by the end of 2025.
Federal Reserve Chair Jerome Powell cautioned those projections could change depending on inflation and the jobs market.
According to data from the BLS released last week, the economy added 272,000 jobs in May. Unemployment was at 4 percent, a slight increase from the 3.8 percent in April.
“These projections are not a committee decision or plan; if the economy does not evolve as projected, the path for policy will adjust as appropriate to foster our maximum employment and price-stability goals,” Powell said.
In the consumer price index, used vehicles increased in May by 0.6 percent. That followed a 1.4-percent decrease in April. Used vehicles are down 9.3 percent in the past year.
Drivers received some positive news in the latest CPI. Gasoline prices were down 3.6 percent in May and for the past 12 months are up 2.2 percent.
Motor vehicle insurance experienced its first monthly decline of the year at 0.3 percent. Insurance has increased 20.3 percent in the past year.
