The May consumer price index (CPI) report was generally in line with forecasts. With Fed officials in the midst of policy discussions today and tomorrow, a single meeting pause is still the most likely outcome.

The slight +0.1% rise in May headline CPI was primarily the result of a -3.6% decline in energy prices. Energy has been particularly volatile in recent months and has been the main driver of overall CPI. A +0.6% energy increase in April had pushed monthly CPI up +0.4%, while a -3.5% energy drop back in March was responsible for a +0.1% monthly gain. This period-to-period volatility illustrates why Fed officials prefer to look at core inflation, which excludes food and energy prices.

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