Benign inflation print, margins getting hit or calm before tariff induced increases?

May CPI rose one tenth both headline and core, below the estimates of up .2% and .3%. The y/o/y gains of 2.4% and 2.8% compare with 2.3% and 2.8% in the month before and about as expected due to rounding. Helping to calm the headline figure was the 1% fall in energy prices m/o/m and down 3.5% y/o/y, mostly due to lower gasoline prices, while food prices were up by .3% m/o/m and by 2.9% y/o/y. Prices for ‘food at home’ were up by .3% m/o/m after falling by .4% last month and higher by 2.2% y/o/y. ‘Food away from home’ is where more of the food inflation is taking place as prices here were up by .3% m/o/m and 3.8% y/o/y.

Services prices ex energy was up by .2% m/o/m and 3.6% y/o/y. The biggest component saw Owners Equivalent Rent up by .3% m/o/m and 4.2% y/o/y while Rent of Primary Residence prices grew by .2% m/o/m and 3.8% y/o/y. Medical care service prices were higher by .2% m/o/m and 3% y/o/y. This is still being VERY understated because there is no world in which health insurance prices were up by just .2% m/o/m and 2.9% y/o/y. Auto insurance continues to show robust price gains, up by .7% m/o/m, though the y/o/y gains are moderating because of tough comparisons. It was up 7% y/o/y. After a heady rise, vehicle maintenance costs were flattish, down .1% m/o/m though up by 5.1% y/o/y. Airline fares is where the deflation continues to come from in services as prices here fell 2.7% m/o/m and by 7.3% y/o/y. Also on the travel side, lodging prices were down by .1% m/o/m and by 1.7% y/o/y.