The U.S. Bureau of Labor Statistics released its May 2025 Inflation report on June 11th, 2025. The report showed that Annual Inflation was up from 2.3% in April to 2.4% in May.
Calculated to two digits, it was really 2.31% in April, and 2.35% in May (not even 1/10th% up). And still below the 2.39% in March.
Economists were predicting higher inflation, so the slight increase was basically a non-event.
Economists were predicting higher inflation, so the slight increase was basically a non-event.
May’s Inflation Prediction:
At 2.35%, May inflation numbers came in at last month’s “extreme low” projection, indicating that inflation could have been worse.
This Month’s MIP
The following chart is our projection for this month, indicating that once again there is the possibility of an uptick in inflation. Because monthly inflation from May through September of 2024 was much lower than normal, if we have a normal summer in 2025, those numbers will be higher this year than last year, causing annual inflation to begin rising. This could cause the FED to postpone lowering interest rates once again. June should be flat to slightly up, with a peak around August (possibly just over 3%). And then a decline from there.
The summer 2024 monthly numbers were:
| May-24 | Jun-24 | Jul-24 | Aug-24 |
| 0.17% | 0.03% | 0.12% | 0.16% |
May’s monthly inflation was only 0.21%, but even if we have another three months like that, annual inflation will still rise.
See this month’s MIP prediction
Annual Inflation… 2.35% in May 2025
- Annual Inflation rose from 2.31% to 2.35%
- CPI Index rose from 320.795 to 321.465
- Monthly Inflation for May was 0.21% lower than April’s 0.31%
- Next release July 15th, 2025
| Jan | Feb | Mar | Apr | May | June | July | Aug | Sep | Oct | Nov | Dec | |
| 2025 | 3.00% | 2.82% | 2.39% | 2.31% | 2.35% | NA | NA | NA | NA | NA | NA | NA |
| 2024 | 3.09% | 3.15% | 3.48% | 3.36% | 3.27% | 2.97% | 2.89% | 2.53% | 2.44% | 2.60% | 2.75% | 2.89% |
| 2023 | 6.41% | 6.04% | 4.98% | 4.93% | 4.05% | 2.97% | 3.18% | 3.67% | 3.70% | 3.24% | 3.14% | 3.35% |
BLS Commentary:
The BLS Commissioner reported:
“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent on a seasonally adjusted basis in May, after rising 0.2 percent in April, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.4 percent before seasonal adjustment.
The index for shelter rose 0.3 percent in May and was the primary factor in the all items monthly increase. The food index increased 0.3 percent as both of its major components, the index for food at home and the index for food away from home also rose 0.3 percent in May. In contrast, the energy index declined 1.0 percent in May as the gasoline index fell over the month.”
Looking at table A below, we can see that on an annual basis, energy is down -3.8%.
The biggest gainers on an annual basis were Services like Food away from home, Energy Services, and shelter.
Inflation: All Items vs. Without Food and Energy
Although these “Seasonally Adjusted” numbers are slightly different than those typically presented by the BLS, the following chart from the Federal Reserve shows the gap between inflation with and without Food and Energy. Comparing the two highlights how much food and energy contribute to overall inflation.
Without food and energy, inflation would be 2.78%. But, due to the downward pressure of Energy, total inflation according to the FED is 2.38%.
Source: St. Louis FED
FED Monetary Policy
May 2025 Summary:
- FED Assets are Falling
- M2 Money supply is rising
- FED Funds Rates Remain at 4.33%
FED Assets and M2 Money Supply
FED Assets continue downward.
BUT… rather than decline as FED assets are doing, M2 returned to the same upward slope of increase as from 2012-2020 (#5).
Global M2
The FED isn’t the only one pumping the money supply. Most other countries also follow the FED’s lead. So, Global M2 Money Supply (the composite of all the major countries’ money supplies) is also growing. We can see that on a global scale, the money supply has been increasing throughout 2025. Generally, an increase in the money supply will result in a rising stock market with a 2 to 4-month delay. Starting at just over 100 in January 2024, it is now above 112, or a 12% increase in about 18 months.
FED Funds Rate
The chart below shows the rapid increase in interest rates from February 2022, when they were just 0.08%, to a year later, when they were at 4.57%. From August 2023 through August 2024, the FED maintained a stable Funds Rate at 5.33%. Then, in September, the FED announced a 1/2% reduction in the range. October numbers show the rate at 4.83%. At its November meeting, the Fed lowered the federal funds target range by 25 basis points to 4.5%-4.75%, with the actual rate coming in at 4.48% in December. On December 19, 2024 they lowered the target range to 4.25 – 4.50%. Since then, the FED held its Funds rate steady from January through April 2025 at 4.33%. And it continued to hold steady at the May 7th FED Meeting.
More info about FED Monetary Policy and Inflation
Inflation Chart
Monthly Inflation Compared to Previous Years:
The monthly inflation rate for May 2025 was 0.21%, slightly less than April 2025’s 0.31%. But, annual inflation still rose because May 2024 was only 0.17%.
Not Seasonally Adjusted Monthly Inflation Rates
Note: January 2022’s 0.84% was the highest January since 1990. June was the highest June since 1941 (although the first quarter of 1980 had some higher rates). Typically, the first quarter has the highest monthly inflation and the 4th quarter is the lowest (even negative).
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
| 2016 | 0.17% | 0.08% | 0.43% | 0.47% | 0.41% | 0.33% | (0.16%) | 0.09% | 0.24% | 0.12% | (0.16%) | 0.03% |
| 2017 | 0.58% | 0.31% | 0.08% | 0.30% | 0.09% | 0.09% | (0.07%) | 0.30% | 0.53% | (0.06%) | 0.002% | (0.06%) |
| 2018 | 0.54% | 0.45% | 0.23% | 0.40% | 0.42% | 0.16% | 0.01% | 0.06% | 0.12% | 0.18% | (0.33%) | (0.32%) |
| 2019 | 0.19% | 0.42% | 0.56% | 0.53% | 0.21% | 0.02% | 0.17% | (0.01%) | 0.08% | 0.23% | (0.05%) | (0.09%) |
| 2020 | 0.39% | 0.27% | (0.22%) | (0.67%) | 0.002% | 0.55% | 0.51% | 0.32% | 0.14% | 0.04% | (0.06%) | 0.09% |
| 2021 | 0.43% | 0.55% | 0.71% | 0.82% | 0.80% | 0.93% | 0.48% | 0.21% | 0.27% | 0.83% | 0.49% | 0.31% |
| 2022 | 0.84% | 0.91% | 1.34% | 0.56% | 1.10% | 1.37% | (0.01%) | (0.04%) | 0.22% | 0.41% | (0.10%) | (0.34%) |
| 2023 | 0.80% | 0.56% | 0.33% | 0.51% | 0.25% | 0.32% | 0.19% | 0.44% | 0.25% | (0.04%) | (0.20%) | (0.10%) |
| 2024 | 0.54% | 0.62% | 0.65% | 0.39% | 0.17% | 0.03% | 0.12% | 0.08% | 0.16% | 0.12% | (0.05%) | 0.04% |
| 2025 | 0.65% | 0.44% | 0.22% | 0.31% | 0.21% |
See: Monthly Inflation Rate for more information and a complete table of Unadjusted Monthly Rates.
Misery Index
Current Misery Index:
Unemployment 4.20% + Inflation 2.35% = 6.55%
This month, inflation is up and unemployment is unchanged, so the misery index is up slightly to 6.55%.
[Read More on the Misery Index…]
Rate of Change (ROC) Charts
Despite the recent rebound the NYSE ROC hasn’t recovered from the November Sell Signal.
The NASDAQ ROC also remains in sell mode.
Bitcoin generated a Sell signal in February but is very near a buy signal!
Ethereum is the one bright spot, generating a BUY signal.
For more information, see NYSE Rate of Change (ROC) , NASDAQ ROC Chart, and Crypto ROC .
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