The Core CPI Declines 3 Months for the First Time Ever


The core CPI which excludes food and energy fell for a record third month.

Year-over-year, the CPI is closing in on negative territory according to the BLS.

Month-Over-Month Key Points

  • The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.1 percent in May on a seasonally adjusted basis after falling 0.8 percent in April.
  • Declines in the indexes for motor vehicle insurance, energy, and apparel more than offset increases in food and shelter indexes to result in the monthly decrease in the seasonally adjusted all items index. 
  • The gasoline index declined 3.5 percent in May, leading to a 1.8-percent decline in the energy index. 
  • The food index increased 0.7 percent in May as the index for food at home rose 1.0 percent. 
  • The index for all items less food and energy fell 0.1 percent in May, its third consecutive monthly decline. This is the first time this index has ever declined in three consecutive months. 
  • Along with motor vehicle insurance and apparel, the indexes for airline fares and used cars and trucks declined in May. 
  • The indexes for shelter, recreation, medical care, household furnishings and operations, and new vehicles all increased. 

Year-Over-Year Key Points 

  • Over the last 12 months, the all items index increased 0.1 percent before seasonal adjustment. 
  • The index for all items less food and energy increased 1.2 percent over the last 12 months; this compares to a 2.4-percent increase a few months ago (the period ending February).  
  • The energy index fell 18.9 percent over the last year. 
  • The food index increased 4.0 percent over the last 12 months, with the index for food at home rising 4.8 percent. 

CPI and CPI-U Year-Over-Year 

CPI and CPI-U Year-Over-Year May 2020

Poor Measure of Inflation

These indexes supposedly measure inflation. 

They do nothing of the kind. The indexes do not include home prices, only rent. 

The purported medical inflation is a joke. Anyone who buys their own medical insurance will tell you their costs are up more than the reported 5.9%. 

Anyone in college has not been pleased with the rising cost of tuition and rent in college towns. 

And anyone with an ounce of common sense knows the current stock market bubble is a measure of inflation. 

Lie of the Day, Month, and Year

The Fed and economists pretend that "inflation" is only up 0.1% year-over-year.

The Fed and economists in general do not know how to measure "inflation".

And the Fed's efforts to produce it has created destructive bubbles sure to pop causing the deflation they hope to prevent.

No Economic Benefit to Inflation

My Challenge to Keynesians “Prove Rising Prices Provide an Overall Economic Benefit” has gone unanswered.

There is no economic benefit to inflation but there are winners and losers. The winners are those with first access to money, namely the banks and the already wealthy.

The Fed complains about income and wealth inequality but they are the primary source.

BIS Deflation Study

The BIS did a historical study and found routine price deflation was not any problem at all.

"Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated the study.

For a discussion of the BIS study, please see Historical Perspective on CPI Deflations

Asset Bubble Deflation

It’s asset bubble deflation that is damaging. When asset bubbles burst, debt deflation results.

Central banks’ seriously misguided attempts to defeat routine consumer price deflation is what fuels the destructive build up of unproductive debt and asset bubbles that eventually collapse.

The Problem is Not Deflation, It's Attempts to Prevent It

For discussion of these ideas, please see The Problem is Not Deflation, It's Attempts to Prevent It.


Comments (17)
No. 1-10

They seem to have no fear of the poor, so they must be left wing if the most leftwing Spanish political definition is taken as reference :

"Iglesias: «Habrá una nueva tipificación de los delitos de odio e incluye la aporofobia»" ABC

"Iglesias :«There will be a new tipification of hate crime and it will include aporofobia (fear of the poor)»"



Also, please don't forget the subtle inflation of giving you less of something for the same price - without advertising the change.

Like when an 8 oz can of something becomes a 6 oz can for the same price.

Doing these kinds of things is much easier because so much of what we buy now is pre-made and pre-packaged. People simply don't notice that the box of waffles or cookies or crackers or the bag of chips or whatever - while the same price - no longer contains the same amount that it used to. They just grab whatever it is and go.

This happens in other areas as well. Lower grades of materials are used to make a product, or production methods/standards are lowered, but the sales price isn't lowered to reflect the difference.

Granted, this isn't going to have a huge effect, but it does matter over time and it is a form of hidden price inflation.

Tony Bennett
Tony Bennett

"The purported medical inflation is a joke. Anyone who buys their own medical insurance will tell you their costs are up more than the reported 5.9%. "


Not just the costs but "weights" are serious head scratchers.

Medical care services - are you sitting down? - make up "only" 7.35% of index.


"Declines in the indexes"
INDICES not indexes
Did you flunk high school Latin?


How many printed trillions more does it translate to? CPI cannot go negative or the economic quacks would loose their jobs.


Price of food has been rising, but who cares.


I still think all they ever really measure to get an inflation figure is gasoline pump prices. Even the screwed-up BLS couldnt come up with a believable number when surveying all those millions of variations of products. At least oil-related prices are real and actually market-driven.


I am doubtful about defending the dollar as a fiat currency. It could go down if the US debauches its currency more than others thereby creating inflation in imported goods ( Walmart). Does the DXY index suggest this?


last 3 months? Gotta love Covid. My wife hasn't spent any of my money the last 3 months! Lets all cheer for Covid and the Keynesian Excess Savings!


As a point of reference, I went to my local Kroger store today to buy ground beef for the grill. I paid $14.45 for a 3-pound package. I paid about $4 less for the same package before the virus. And the package was supposedly on sale.

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