The Federal Reserve has some positive news about inflation as it heads into its June meeting on Wednesday afternoon. The Consumer Price Index cooled slightly in May, with the all items index posting a 3.3% annual increase before seasonal adjustment, according to data released Wednesday by the Bureau of Labor Statistics (BLS).

This is down from a 3.4% annual increase in April. On a month-over-month basis, the all items index remained flat, marking the first month with no monthly increase since July 2022. In April, the index posted a 0.3% month-over-month increase.

Despite the slowdown in inflation, economic experts don’t expect any big interest rate changes to come from the Feds’ Wednesday meeting.

“It is extremely unlikely that the Fed will cut rates, but the committee will release its updated economic projections, the so-called dot plot, which will likely show that the Fed is now expecting just two interest rate cuts in 2024,” Lisa Sturtevant, the chief economist at Bright MLS, said in a statement. “As mortgage rates remain near 7%, a lot of attention is being paid to the timing of Federal Reserve interest rate cuts. But a delay in Fed rate cuts is not the only reason mortgage rates will remain higher for longer. A record high Federal debt is also contributing to persistently high mortgage rates.” 

The all items less food and energy index posted a 3.4% annual increase in May, with a 5.4% yearly uptick in shelter costs accounting for over two thirds of the total 12-month increase. Compared to April, the all items less food and energy index was up 0.2%, down from a 0.3% monthly increase in April. Again, the shelter index, which rose 0.4% month-over-month, was the greatest contributor to the index’s increase.

Other indexes that rose on a monthly basis include medical care (0.5%), used cars and trucks (0.6%), and education (0.4%). The indexes for airline fares (-3.6%), new vehicles (-0.5%), communication (-0.3%), and recreation (-0.2%) were among those that posted a monthly decline.

Despite a monthly decline of 2.0%, led by a 3.6% drop in gasoline prices, the energy index was up 3.7% annually. The food index posted both annual and monthly increases of 2.1% and 0.1%, respectively.