Yahoo Finance breaks down the May CPI (Consumer Price Index) report, bringing on top economic experts to analyze the latest inflation data. Join Yahoo Finance’s Dani Romero, Brooke DiPalma, and Pras Subramanian as they discuss the latest CPI print and inflation trends in leading consumer sectors.

Interactive Brokers Senior Economist José Torres provides insights into shelter costs and how the market and the Federal Reserve are interpreting fresh inflation data.

Yahoo Finance Columnist Kerry Hannon explores the impact of inflation on retirement and peoples’ ability to contribute to their savings.

The May consumer price index report remained unchanged month over month, but inflation still remains sticky for Americans.

Join us as we take a look at some of the sectors where inflation is hitting the hardest and how consumers are feeling features are jumping this morning after May’s inflation print coming in cooler than expected.

Now we are taking a deeper dive into three sectors that have been hit by sticky inflation.

We’re talking shelter, food and autos team coverage here for you to break it all down.

Yahoo Finance is Danny Romero Brook di and pros a Subramanian standing by Danny.

Let’s start with you.

You’re watching Shelter, obviously a key component here within this print.

What did you find this month?

Sea a shelter still remains a sticky component of the inflation picture.

But economists tell me that this inflation in Shelter is under way.

Now if we take a look at those numbers, Shelter posted 8.4% monthly gain, that is the fourth consecutive month of monthly gains and on a yearly basis, Shelter came in at 5.4% and that is much lower than marches peak of eight 0.2%.

So we are seeing that cool down.

Now, remember the Shelter index makes up a third of the overall CP I basket.

And there are two components that economists really pay attention to when it comes to this index.

That’s the hypothetical rent that you would earn if you rented out your property and rent, which lags real time rent data because the government rent data every six months which creates this lagging effect.

So if we take a look at those numbers, oe owners equivalent rent posted a 0.4% monthly gain last month and rents came in at 0.3% on a monthly gain.

Now, the reason we’ve seen rent growth really moderate is because there’s been so much apartment supply that has been added to the market.

But due to the fact that rates have stayed this high, some industry experts do expect some downside risks ahead because there has been this pullback in construction activity that will put some downward pressure on supply.

So they are saying that this could result in another hurdle for the fed who has been expecting housing costs to come down.

But overall economists at Goldman Sachs are expecting that overall inflation to uh range between 0.3% by December of this year and on a yearly basis, they’re expecting the shelter, the shelter component to come in at 4.9%.

So we are in the right direction.

Like I said, disinflation in the shelter component is underway, Shana.

Well, Americans continue to feel the brunt when it comes to the cost of food.

We did see that number uh take a bit of a different turn.

This morning, we saw in the month of May overall food inflation increase 2.1%.

Now month over month, as you can see right here, we saw the number increase 0.1%.

Now that comes from a previous month, we saw that flat month over month.

And when you take a look at the cost of groceries and the cost of dining out, we did see the cost of groceries inflation flat month over a month that’s previously compared to a monthly decline of 0.2%.

Now, the cost to dine out something that we’ve been watching really closely is the cost of food and labor commodities continue to increase.

We saw the cost to dine out jump 0.4% last month.

That’s higher than the previous monthly increase of 0.3 percent.

And this report comes as consumers are beginning to really push back here when it comes to shopping at retailers.

And when it comes to shopping at or rather going to dine out.

What we begin to see here is both retailers and fast food chains take action.

We did hear from target last month that they plan to cut prices or lower prices on 5000 items.

1500 those items have already been marked down and those are on everyday goods that consumers are really going to think, paper towels, think milk, think meat.

We also heard from fast food chains like KFC mcdonald’s and Burger King, they all announced a $5 value meal menu as they really looked to entice these inflation weary consumers to come back in the door and choose to dine out over going to the grocery store brad, back to you.

All right, Brooke, let, let me pick it up from here because we also want to quickly take a look at the vehicle prices because we’re actually seeing some relief within this print here price.

You’ve got the latest on that for us.

Yeah, new and so new news prices both down year over year used prices picking up just a little bit months, so a little mixture.

But the numbers overall, new cars down a half percent uh for the month and down 8/10 of a percent year over year.

That’s both down compared to April and used car prices up a little bit there 6/10 of a percent, but down 9.3% a year of the year now that there is up compared to, of course, but down year of the year.

So you know what we’re seeing is a continued moderation there, a little blip there with you because potentially there’ll be some noise there with people coming in the, in the market in the, in the spring months to buy new vehicle to buy used vehicles.

Uh, typically you do that after they get their tax, uh, tax returns.

But overall for months now we’ve been seeing both new and used going down, down, down, down down and maybe that used price po popping up just a little bit because prices were so low and pross while we have you.

I mean, you’ve teed up the discussion here, especially thinking about autos.

I mean, I’m zeroing in on some of those auto insurance prices and the reason why we posted our graphic last print of everywhere inflation is and isn’t.

And that was what got the biggest response people talking about their auto insurance prices here.

And you know, one of the things jumped out to me year over year.

Yeah, still up 20.3%.

But then you look at that month, over month adjusted.

We started to see that decrease just a hair, a smidge down about 1/10 of a percent.

And I was excited to talk with you about this process because we got some fresh data out from JD Power yesterday on a survey with repair costs still rising.

More than 20% of vehicles involved in collisions now considered total write offs.

Insurers are actually still losing money.

So that is really playing in to where some of those prices are certainly, uh, pressuring both the insurers as well as some of the new or used car owners out there as well.


You know, with the insurance, there’s a, there’s a lag there because a lot of states regulated by, by, by regulators and they have to tell, actually approve price hikes.

So a lot of the insurers had to wait longer and longer to hike those rates and, and it took a long time for them to do so and they’re still doing that and, and people are the new, the new premium.

So they can’t believe how high things are because they had to kind of catch up to where they were.

And you’re absolutely right about repair costs, especially for EVs things like that.

More highly tech packages and pro and products.

Those cost a lot more money to repair than your old, you know, 67 Chevelle.


Uh Well, I had to sell that before I came to New York Pros.

Thanks so much for taking the time.

Danny Mattie and Pros appreciate the breakdown here on these three core areas of the CP I print.

Well, we’ve been discussing it.

Let’s turn back to one of the most important sectors in the inflation, print shelter, the cost to own or rent a home has stayed pretty high all year even as prices in other sectors have gone down here with the latest.

We’ve got our very own, Danny Romero who’s been reading into this, Danny, what do you make of it?

Brad Shelter remains a sticky component in the inflation picture.

But economists tell me that the disinflation process in shelter is underway.

Shelter posted 8.4% monthly gain, the fourth consecutive month of gains and on a yearly basis, Shelter came in at 5.4%.

The slowest annual increase since April of 2022.

Remember the Shelter index makes up a third of the overall CP I basket.

And there are two components that economists pay close attention to and that hold the biggest weight in the shelter figure that’s owner equivalent rent.

O that’s the hypothetical rent you would earn if you rented out your property and rent, which lags real time data because the government collects rent data every six months causing a lag in that index.

So o came in at 0.4% gain last month while rents came in at a 0.3% rise la last month.

Now, the reason why renters have been seeing slower rent increases has been due to the new apartment supply that has been added to the market.

And so some renters are reaping those benefits in some markets as some landlords are really offering some form of an incentive to attract renters into the market.

Now, I want to say that typically rents do go up in the spring and summer months because people take advantage of the warmer weather to move.

Now, some industry experts say it’s unlikely that we will see high rent price increases this year or next year due to the increase of supply brad.

Let’s take a deeper dive into those sectors that saw the biggest moves in prices in May shelter.

Now we’ve got Jose Torres who is the interactive brokers, senior economist, Jose, great to see you here this morning.

I I just wanna get your read in on two of the areas that inflation has continued to remain sticky.

Well, energy prices declined quite sharply in May and that really drove price pressures lower, particularly in gasoline, jet fuel, but also energy services came down even though natural gas prices increased.

Now, within the core areas, we have transportation services.

We saw a big decline due to auto insurance rates but also because of air tickets as well as bus tickets in terms of shelter.

However, I’m a little less optimistic that rates of inflation are going to tick down aggressively.

When we look at the four components, new rents and new homes, those two are cooling off, but lease renewals and existing homes remain quite robust.

I’m expecting shelter to continue to support inflation between three and 4%.

And I think that this is the first report all year really where price pressures came in at a close to the fed’s 2% price pressure, price pressure objective.

So Jose just, just take that a step further.

Then for us, in terms of how excited or maybe we shouldn’t be too excited about this print.

Is this enough really to reaffirm some of that confidence in the fact that inflation is ticking down and we are on this steady path now here towards that 2% goal.

However, we’ve been excited for quite some time since November.


We in the S and P 500 we rallied from 4100 because of rate cuts are right around the corner.

At for around 4700, we started rallying because we didn’t have rate cuts around the corner because earnings so strong.

And now here at 5300, we’re rallying again because we’re seeing a path towards rate cuts widen out.

I think we have to see more of these inflation reports.

And the bar here, Shana is 16 Bs month over month, which gets us to 2% on an annualized basis.

We get to see more of these doughnut cpis month over month or 10 bits here and there.

We heard July tossed into the conversation here this morning, Jose for a potential rate cut.

You know, uh January to May May is the first time we’re getting a decent inflation report from January to April.

I think September marks the end of the journey across the monetary policy bridge and the fed will deliver its first rate cut of the cycle.

All right, Jose Torres.

Great to get your insight here on the heels of this print.

Thanks so much May’s consumer price index.

Also one of the core inflation readings that the FO MC, the Federal Open Market Committee evaluates coming in lower than expected despite it being unchanged month over month, it’s still up 3.3% year over year.

And the higher cost of living has made saving for retirement even more difficult and to break down how higher prices are impacting retirement savings.

We’ve got Yahoo Finance’s very own carry, Hannon here with us.

But, you know, high prices have been relentless on people and, and frankly, people are more concerned and worried about paying their monthly bills and saving for retirement.

So, you know, we have, even with the latest report, medical expenses are still up, food is still up, you know, housing even above your mortgage bank rate survey.

I saw recently show that since 2020 the costs of your say premiums for your home insurance for your um all kinds of variety of things, your property tax and so forth are up 26%.

These are costs that people can’t get away from and even your student loan costs.

So what we’re talking about here is, yes, in fact, uh an alliance survey uh recently showed that seven of 10 savers have kind of hit the pause button or even um cut back on what they’re saving completely.

Now, Fidelity has a recent study out uh at their most recent number showing that, you know, more people are taking loans from their 401 Ks than they did before.

This all comes down to cash flow and sort of feeling the squeeze.

But Brad, I want to say we’re not talking fairly about workers and people who have access to an employer provided retirement plan.

If your employer is automatically enrolling you in a retirement plan and whisking your money pre-tax into these plans, you’re probably not doing anything.

We’re talking about the 56 million Americans who work for companies that you do not have retirement plans, employer provided retirement plans and they absolutely have to voluntarily make the decision to save for retirement.

These are the folks that are really getting pinned on this thing and that’s what concerns me because, you know, people who can uh, automatically save for retirement, it’s a whole different thing and, and studies show that those who have to do it voluntarily do 50% less even on the best of days.

Yeah, but there are some things you can do and the most important thing if you’re doing this on your own, do it yourself, retirement at least don’t give up completely.

Try to automatically, even if it’s $50 every paycheck or whatever, it might be automatically set it up from your checking account into a Roth ira something that is out of sight, out of mind, automated.

So, even as these pressing bills really, you know, gnaw at you, this is coming out and you can ramp that up as you go along.

I also think it’s really helpful to kind of adjust your mindset if you can possibly just make yourself sit down and run one of these free retirement calculators that are on fidelity vanguard A ARP Schwab, whatever, whichever venue you wanna head to.

And even though it’s a little daunting, you get a sense of what you’re saving for.

So it just shifting your picture to looking to the future because I think it’s really difficult for people to worry about the future when they’re trying to make their monthly bills right now.

But it’s hugely important if you’re stopping, if you’re taking a loan from your retirement account, you are stopping that money from continuing to grow for you.

Yes, you’re gonna pay it back with interest to yourself.

That’s fine.

But at the same time, you’re really losing some of that compounding and that will come back to bite you uh in later years.

Well, inflation has eased over the last year, but most Americans aren’t feeling that way and while the fed is working to coal prices even more, some people feel that they’re doing and what they’re doing is making inflation even worse here to break down how people are feeling and explain the trends that we’re seeing in inflation.

We’ve got Stephanie Sanche who is the Harvard University professor of Economics.

Great to have you here with us.

Uh OK, let’s break down what consumers are feeling right now.

We’ve heard them to find a few different ways, whether that’s value conscious or whether that’s battle weary.

As we heard.

Uh Dana Peterson, the uh conference board chief economist, tell us just a couple weeks back.

What we see is that people really feel like inflation is lowering their living standard.

So, uh, people have an over overwhelming feeling that wages just don’t keep up with inflation.

Um, this is very widespread, whether you’re lower income or higher income.

Um, and people actually tend to attribute this a lot to employer discretion.

So if people don’t see wage rises, they tend to say it’s because my employer doesn’t want to increase my wage.

Um, and so people who think that employers have actually a lot of discretion, uh, and choose not to increase wages.

Um, and another thing that’s really interesting is that although there have been many wage increases during this period, uh, it’s very rarely the case that people attribute them to inflationary adjustments.

Uh, most people who have received wage increases will say that it has happened because, um, of their job performance or career progression, especially for those who have switched jobs during that period.

Uh, and so any wage increase is not really attributed to inflationary adjustment either.

And, and so to what extent do you expect that we’ll continue to see people try to job hop potentially to get those wage increases or to get those per, uh, per performance and promotions in order to offset inflation to the best of their ability.

Yeah, I think it’s, it’s, it’s probably going to continue happening because inflation affects us in many different roles.

We’re consumers.

Um, and we’re affected in terms of our uh quantity and quality of things we can buy, we’re workers.

Um and we are affected by the wage increases that we get.

We’re also asset or debt holders and inflation also impacts us in that role.

And then we’re also just human beings with emotions.

And what we see is that there’s a real suffering from inflation uh in terms of the very negative emotions that generates like fear and anger and stress that is quite widespread.

Um And hand in hand with that goes a big sense of inequity.

Um People feel like those with higher incomes are much better able to keep pace with inflation and just not be as hurt.

Uh So there’s a real sense in which inflation, you know, fosters inequality and, and, and it’s perceived to be quite unfair to, to what extent do you believe people have a firm grasp on not just the fed’s dual mandate, but what is actually in their control as it pertains to fighting inflation?

So I think it’s, it’s quite tough to understand exactly what, you know, what the role of the Fed is, what tools, uh what tools it has and what we can see is that uh there’s a there’s a widespread perception, for instance, that high interest rates lead to higher inflation, um which is, you know, understandable if you just look at the correlation that’s out there, you know, in periods of inflation you will see in general higher interest rates, but the causality presumably goes uh goes the other way.

Um And so there, there are these, uh there are these beliefs that might be very uh very different from what the FED actually is doing and what that does is that there’s very little support for standard monetary policies that we economists might think are very standard to fight inflation such as increasing interest rates or reducing money supply.

Um Instead, there’s much more support for fiscal policy, particularly reducing the government debt, which is, you know, perceived by people to be the number one cause of inflation is, is government action uh according to people.

Um And to try to do that, uh you know, especially by more in more progressive ways rather than cutting spending on key social programs.

And there’s also a lot more support for less standard policies that target companies like more antitrust regulation uh or increasing corporate taxes.

Um as well as something interesting that has wide bipartisan support, which is freezing the prices of essentials, like for instance, gas prices or food prices.

And so all of these things in mind, who who’s bearing the brunt of the blame for inflation at, at this point.

So according to, according to people, if you ask very openly, you know, what’s the number one cause of inflation?

Uh Republican respondents will tend to blame the government more than Democrat respondents, but it’s quite high across the board.

Um And you know, within that, uh within that category, it’s typically just the increases in spending that have happened and the ballooning government debt.

Uh So this is according to people, the number one cause um the number two cause according to people is on the supply side.

So that is due to supply chain disruptions um especially during the pandemic.

Uh and just these cost increases that have happened.

So those are the top two reasons that people perceive Stephanie Sancha who is the Harvard University Professor of Economics.

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