Inflation: Flat in May

By at 12 June, 2024, 12:50 pm

by Raymond J. Keating –

The Consumer Price Index (CPI) report for May 2024 is my kind of inflation report. Unfortunately, it’s just one month, and when inflation runs hot, it also tends to be volatile from month to month. Nonetheless, the May number from the U.S. Bureau of Labor Statistics was most welcome.

In May, CPI inflation came in flat, that is, at 0.0 percent. That was particularly good news given that inflation had been running hot over the previous four months. (See the following chart of the BLS report.)

Over the past three month, with May’s stellar performance, the annualized rate of inflation came in at about 2.8 percent, and for the past six months at 3.2 percent. And over the past year, CPI inflation registered 3.3 percent.

While this May number, again, is gladly received, it is only one month. And given that inflation ultimately is about too much money chasing too few goods, the best policy mix to counter inflation is for the Fed to get serious in reining in loose money (that is, actually reducing the monetary base (i.e., currency in circulation plus bank reserves) over which it actually has control), and Congress and the White House aggressively advancing a pro-growth agenda featuring tax and regulatory relief, and advancing free trade.

Unfortunately, none of this is really happening, so we are left with the private sector doing the hard work of generating growth and reducing inflation without any policy help.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist, The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist and The Weekly Economist III: Another 52 Quick Reads to Help You Think Like an Economist.


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