While inflation is contained, the unemployment rate is at 7.6%, meaning the Fed is falling short of its mandate to keep prices stable and maximize employment.
For the 12 months that ended in May, consumer prices climbed 1.4% compared to a 1.1% year-over-year gain reported in April. For the same period, the core CPI rose 1.7%, the same as in the prior month.
Energy costs increased 0.4% from a month earlier, while food prices dropped 0.1%, the first decrease since September 2009. The decline was driven by a record 0.9% slump in baked goods.
Delta Air Lines hedged rising jet fuel costs by purchasing a refinery a year ago, a move that has helped the company save $400 million.
“We’re not taking full ownership for the reasons why jet fuel costs are down,” Delta President Ed Bastian said at a June 13 conference. “We know there is other factors that are also influencing that curve. But over the last 90 days, we’ve been paying as a company $0.10 less per gallon for jet fuel than we would have historically paid.”
The Cheesecake Factory Inc., Ruth’s Hospitality Group Inc. and other chains have reported lower-than-expected increases in beef and other commodity costs so far this year. That’s good news for Cheesecake Factory, said Doug Benn, executive vice president and chief financial officer at the Calabasas Hills, California, company.
“Commodity cost inflation is more benign than we thought it was going to be at the beginning of the year,” Benn said at a June 11 conference. “In the first quarter, we had slightly better cost of sales because the inflation was lower and we lowered our overall cost of inflation, cost expectations, for the year.”
The cost of medical care commodities declined 0.5%, reflecting a record 0.7% drop in drugs.
Even with inflation under control, paychecks are failing to keep pace. Hourly earnings adjusted for inflation declined 0.2% in May, and were up 0.5% over the past 12 months.
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