As inflation continues to cool across the US, Northeast may continue to feel pinch

Even amid slowing national inflation, residents in the Northeast continued to see higher prices for goods and services in May, primarily due to rising housing costs.

However, while overall consumer costs increased by 0.1%, Northeasterners may have noticed some financial relief when it came to grocery prices and their utility bills. Food costs fell by 0.1%, while energy costs fell by 1.8% in the region comprised of states including New York, Massachusetts and Pennsylvania, according to the Labor Department’s consumer price index.

Released Tuesday, the federal government's consumer price index serves as an inflation gauge prepared monthly by the Bureau of Labor Statistics. The index measures the average change over time of what urban consumers pay for daily goods and services such as food, clothing, shelter, fuel, transportation fares and charges for doctors' and dentists' services.

Now that inflation has fallen to 4% nationally, down from 8.6% a year prior, forecasters have indicated that the Federal Reserve is expected to abstain from another rate hike Wednesday following a historic 14-month wave of interest rate increases.

In the Northeast region — which also includes Connecticut, Maine, New Hampshire, New Jersey, Rhode Island, and Vermont — consumer costs have increased by 3.1% in the past year, the smallest yearly increase since March 2021, and well below the recent peak of 7.6% in June 2022.

Key regional takeaways

• May is the first month since February of 2021 that food costs in the Northeast region declined from the previous month.
• Lower prices for meats, poultry, fish, and eggs dropped a combined 1.6%, the largest percent decrease in the index since July 2020. Dairy and other related products were down 1.2%, while nonalcoholic beverages and beverage materials rose 1.1% and fruits and vegetables rose 0.6%. But food costs are still up from a year prior, having increased by 6.2% since last May.
• The energy index decreased for the fourth month in a row, down 1.8% since April as all energy categories except for gasoline continued to decline. Still, gasoline saw a smaller increase in May (1.3%) than in the previous month, when costs spiked 4.5% in April.
• Energy prices are down 13.7% from a year prior, the largest decline since May 2020. The decrease was mainly due to gasoline prices that had decreased by 21.2%, the fourth month in a row of declines following 24 months of increases that peaked last June at 60%.
• The prices for new and used motor vehicles increased 0.9% mainly due to a 3.3% rise in prices for used cars and trucks. Prices for new vehicles also increased 0.3%. Costs for new vehicles have been climbing in the past year, up a total 5.2% since last May even as the cost for used vehicles has declined by 4%.

Inflation in the MidwestFood costs on the rise in the Midwest, even as U.S. inflation levels continue to dip

Inflation in the WestAs US inflation continues to cool, consumer costs largely on the rise in West

U.S. inflation numbers for May

May marked the 11th straight month that inflation slowed across the United States, providing Americans with relief at both the gas pumps and grocery stores.

Consumer prices increased 4% last month from last May, the smallest yearly increase since March 2021, but still higher than the Federal Reserve’s 2-3% inflation target. That increase is also down from 4.9% in April and a 40-year high of 9.1% last June, according to the Labor Department’s consumer price index.

Prices rose 0.1% from April to May following a 0.4% increase from March to April.

The index for shelter was the largest contributor to the monthly increase, followed by an increase in the index for used cars and trucks, according to the report.

The food index increased 0.2% in May — including a 0.1% increase to grocery prices — after being unchanged in the previous two months. Restaurant prices increased by 0.5% and are up 8.3% over the past year.

Meanwhile, the energy index declined 3.6% as energy commodities like gasoline and oil, as well as energy services such as electricity and utilities, all fell. Gas prices alone fell 5.6% in May, down nearly 20% from a year ago.

Other indexes that saw a decrease in May include household furnishings and operations, as well as airline fares.

Nationally, price increases have largely eased, which is part of the reason the Federal Reserve is expected to pause its series of aggressive interest rate hikes meant to staunch the fallout of inflation. However, the Fed's concern with core prices — which exclude volatile food and energy items and better capture longer-term trends — may mean another interest hike is in the horizon in July.

The Fed will announce its official interest rate decision Wednesday afternoon after the ending of its next policy meeting. That announcement will also include a summary of economic projections of what it expects inflation, employment, interest rates, and economic growth to be in coming years.