The pace of inflation in the United States moderated, but its impact continues to be felt.

The State Street PriceStats index shows it rose 0.65 percent in May on a non-seasonally adjusted (NSA) basis, lifting the annual rate to just over 5 percent. Although still elevated, this marks a notable deceleration from March’s record monthly surge of 1.4 percent and the first move above 5 percent since September 2022.

State Street PriceStats enables daily inflation measurement with just a three-day lag, offering timely insights that complement traditional government statistics. It serves as a valuable leading indicator and is especially useful during periods when government releases are delayed or unavailable. Its daily insights are increasingly relevant for policymakers, investors, and analysts seeking to track inflation dynamics in real time.

Covering over 27 countries and multiple sectors — including food, health, and transportation — State Street PriceStats uses consistent methodologies to ensure its indicators are comparable across geographies, time periods, and official data sources.

The first- and third-largest monthly jumps in the State Street PriceStats index — recorded in March and April — closely mirrored subsequent readings in the Bureau of Labor Statistics (BLS) data, with an average error of a couple of basis points. Such a minimal variance is negligible when compared to large one-percentage-point moves. If this pattern holds in the BLS May release, we can expect more concerning news on headline inflation.

Though State Street PriceStats rose 0.65 percent last month (NSA), the increase is in reality a noticeable slowdown — about half the monthly rate of inflation recorded in March and a third lower than in April. Even so, May’s rise suggests that inflation pressures are still far from fully under control.

Prior to the March and April surges, a gain of this magnitude would have represented the highest monthly reading since June 2022, the peak of the previous inflation shock. The bottom line? Inflation momentum slowed in May, but it is still alarmingly strong. This dynamic is now pushing through to the annual inflation rate. After climbing past 4 percent at the end of March, the annual rate, according to State Street PriceStats, rose above 5 percent at the end of May. Official measures appear to be tracking in the same direction. Headline inflation, excluding shelter, jumped to 4.1 percent in April and increasingly showed potential to accelerate, representing a challenge to both the Federal Reserve and inflation forecasters alike.

For now, a key point of reassurance is that the dramatic moves in inflation are confined to fuel prices. Other sectors, including food, household equipment, electronics, and health and beauty, are still showing more typical increases. Only seasonally robust gains in apparel warrant closer attention, though this trend was evident prior to February. Overall, the pattern seen in March persists — a rapid pass through of higher energy prices is creating grim inflation headlines, but contagion into other prices remains largely absent for now.
 

About the State Street PriceStats indicators

The State Street PriceStats series are designed to provide a low-latency and high-frequency view into inflation trends that is comparable to official consumer price index (CPI). The features of the process are as follows:

• Daily online price collection: State Street PriceStats collects price data daily from over 1,500 multi-line retailers using web scraping technologies, focusing on those with both online and physical stores. Research has shown that retailers tend to adjust online prices first.
• Data structuring and cleaning: Models then clean and standardize raw price data to ensure consistency across more than 40 million products, converting unstructured HTML into structured datasets ready for analysis.
• Categorization and quality checks: State Street PriceStats categorizes prices by economic sectors and sub-sectors, calculates performance statistics, and applies a red-flag system with daily manual checks to resolve data anomalies.
• Index calculation using econometric techniques: State Street PriceStats computes daily inflation statistics using proprietary econometric methods and publishes the results with a three-day lag.
• Retailer and product selection: State Street PriceStats selects retailers based on market share and city presence, and includes over 500,000 daily prices — far exceeding the 80,000 monthly prices used by the BLS.
• Use of CPI weights and no quality adjustments: State Street PriceStats applies official CPI weights where possible and adjusts for online data characteristics, calculating price changes only from consecutive observations of identical products without applying standard quality adjustments.

For more information or to request a demo, visit our State Street PriceStats Solutions page.