The U.S. Bureau of Labor Statistics reported the consumer price index increased (+0.1%) in May, after a (+0.4%) reading in April , (+0.1%) in March, and (+0.4%) February. The all items index had the smallest 12-month increase since the period ending March 2021 at (+4.0%) before seasonal adjustment, this compares to (+4.9%) in April, (+5.0%) in March, and (+6.0%) in February. The index for shelter (+0.6%) was the largest contributor to the monthly all items increase, followed by an increase in the index for used cars and trucks (+4.4%). The food index increased (+0.2%) in May after being unchanged in the previous 2 months. The index for energy dropped (-3.6%), with decreases in the indexes for gasoline (-5.6%), fuel oil (-7.7%), electricity (-1.0%), and natural gas (-2.6%). Core CPI inflation which excludes food and energy increased (+0.4%) in May, matching the previous two month's reading, and follows (+0.5%) in February. The annual rate of core CPI inflation is now at (+5.3%), as compared to (+5.5%) in April, (+5.6%) in March, and (+5.5%) in February. The shelter index increased (+8.0%) year over year, accounting for over 60% of the total increase in Core CPI. Other indexes with significant increases over the last year include motor vehicle insurance (+17.1%), recreation (+4.5%), household furnishings and operations (+4.2%), and new vehicles (+4.7).

The US Energy Information Administration reported that US commercial crude oil inventories increased by 7.9M barrels to 447.1M barrels (now at the five-year average) for the week ending June 9th. Gasoline inventories increased by 2.1M barrels (7% below the five-year average), and distillate inventories increased by 2.1M barrels (14% below the five-year average). Total commercial petroleum inventories increased by 12.1M barrels. Crude oil refinery inputs averaged 16.6M barrels per day, a slight decrease of 60K barrels per day as compared to the previous week’s average. Refineries operated at 93.7% of their operable capacity, as gasoline production increased to an average of 10.2M barrels per day and distillate fuel production increased to an average 5.0M barrels per day. Crude oil imports came in at 6.4M barrels per day, a decrease of 19K barrels per day as compared to the previous week. Crude oil imports averaged about 6.5M barrels per day over the last four weeks, almost unchanged from the same period last year. Total motor gasoline imports averaged 1,054K barrels per day, and distillate fuel imports averaged 136K barrels per day.

The Federal Open Market Committee (FOMC) announced it would leave the benchmark federal funds rate unchanged, keeping it in the range of between 5.0% and 5.25% — the highest level since October 2007. The move marked the first pause after ten increases since March 2022. The FOMC statement stated that “Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time.” The dot-plot projections pointed to two more 25-basis point rate hikes this year, as the 2023 median expectation for the federal funds rate ticked up from 5.1% in March. The median fed funds rate is expected to be 5.6% in 2023, 4.6% in 2024, and 3.4% in 2025. The FOMC’s latest projections forecast the annual GDP growth to be 1.0% in 2023, 1.1% in 2024, and 1.8% in 2025. Inflation for headline/core is projected to be 3.2% / 3.9% in 2023, 2.5% / 2.6% in 2024, and 2.1% / 2.2% in 2025.