Headline CPI (YoY)
3.4%
▲ Above Fed's 2% target
Core CPI (ex-food & energy)
3.6%
→ Stubborn — driven by shelter
Core PCE (Fed's preferred)
2.7%
→ Closer to target, still above
Monthly Change (MoM)
+0.3%
→ Steady pace, no acceleration
CPI by Category — Year-over-Year % Change
Motor Vehicles
4.6%
▲ +0.3
Food Away From Home
4.1%
→ 0.0
Used Cars
-6.9%
▼ Falling
Source: Bureau of Labor Statistics, May 2026 CPI release. Bar width proportional to relative inflation rate.
Core vs. Headline — What's the Difference?
Core CPI (ex food/energy)
3.6%
Core PCE (Fed target)
2.7%
Why Core PCE matters more: The Fed targets Core PCE — not CPI — because it excludes volatile food and energy prices, and adjusts for consumer substitution. At 2.7%, Core PCE is 70 basis points above target. That's why the Fed is holding rates at 5.25%.
Headline CPI — 7-Month Trend (YoY %)
NovDecJanFebMarAprMay ▸
Nov: 3.7%Dec: 3.9%Jan: 3.7%Feb: 3.4%Mar: 3.2%Apr: 3.3%May: 3.4%
Trend: plateau at 3.2–3.4% range. Disinflation stalled — "last mile" toward 2% is proving slow.
Distance from Fed's 2% Target
0%Fed target: 2%Current: 3.4%5%
Core PCE at 2.7% is 70 basis points above the Fed's 2% target. At the current pace of decline (~0.1–0.2% per month), the Fed could gain sufficient confidence to cut rates by September–October 2026.
What this means for your business
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Shelter costs — still the driver
Rent and owners' equivalent rent (5.5% YoY) are the biggest single contributor to sticky inflation. If you're leasing commercial space, expect elevated rents to continue.
🍽️
Food away from home at 4.1%
Restaurants and food service businesses face both input cost inflation (food at home +2.4%) and consumer price sensitivity. Menu pricing power remains, but margins are squeezed.
⛽
Energy falling — a tailwind
Energy prices are down 1.4% YoY. Lower fuel costs are a genuine tailwind for logistics, delivery, and any business with a fleet or high energy usage.
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Rates stay high until PCE drops
With Core PCE at 2.7%, the Fed won't cut until late 2026 at the earliest. Business borrowing remains expensive. Fixed-rate debt is still preferable to variable.