THE inflation fell significantly in May in the US, reaching the lowest point of two years, a happy news for the purchasing power of the Americans and also for the federal bank (Fed) which will meet later today and may not proceed with an increase in interest rates.

The Consumer Price Index (CPI) increased by 4%, on an annual basis, compared to 4.9% in April, according to the figures announced by the Ministry of Labour. This level is within the range expected by analysts and the lowest since March 2021. Compared to July 2022, inflation has more than doubled, having then reached 9.1%, the highest level in the last 40 years.

Asset inflation is mainly due to high property prices while the price of used cars also increased. On the contrary, the cost of energy fell 3.6% within a month and total by 11.7% on an annual basis. On a monthly basis, prices of consumer goods increased in May by 0.1% compared to 0.4% in April. The slowdown is greater than expected, since analysts had estimated that it would also be at 0.4% in May. Excluding food and energy prices, so-called core inflation remains steady at 0.4% month-on-month but has eased to 5.3% year-on-year.

Based on this new, positive data, analysts estimate that the Fed will not raise interest rates further at its policy-setting meeting starting today. In the last 14 months interest rates have increased approximately tenfold.