CPI Report Shows Inflation Has Been Cut in Half From Last Year’s Peak

Inflation has been cut by more than half from last year’s peak, but remains far above what Fed officials meeting this week would like to see.

Economists surveyed by The Wall Street Journal estimated that consumer prices rose 4% in May from a year earlier. The so-called core consumer-price index, which excludes volatile food and energy categories, was estimated to have risen 5.3% in May from a year earlier. Economists see core prices as a better predictor of future inflation. Core prices remain elevated in part because an earlier surge in housing-rental prices continues to show up in the inflation figures.

April’s increase in inflation was driven by housing costs, for instance, along with higher gasoline and used-car prices, the Labor Department said last month.

Federal Reserve officials are meeting June 13-14 to decide their next steps to cool inflation, which they would like to see at 2%. Fed officials could hold interest rates steady at the meeting, while preparing to increase rates again in the summer or the fall if they don’t think enough progress has been made on inflation.