The May Consumer Price Index (CPI) was very much in line with expectations, as both the core and overall index rose 0.2 percent in the month. Over the last year, the core index has risen 2.2 percent, while the overall CPI has risen 2.8 percent. Inflation in the core continues to be driven largely by higher shelter costs. A core index that excludes shelter rose just 0.1 percent in May. It is up 1.3 percent over the last year.

The shelter component of the index rose 0.3 percent in May driven in part by a huge 2.9 percent jump in the “lodging away from home” (primarily hotels and motels) category. This figure is highly erratic. It has risen 4.4 percent over the last year. The shelter component has risen 3.5 percent over the last year, driven by a 3.6 percent increase in the rent proper index, and a 3.4 percent increase in the owners’ equivalent rent (OER) index. The rent proper index includes utilities in many units. As a result, when energy prices rise rapidly it would be expected to increase at a faster rate than the OER index. For the month of May, the OER increased by 0.2 percent and the rent proper index increased by 0.3 percent.