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Inflation increased 0.1% over the month of May, and is up 4% from a year ago, according to the latest Consumer Price Index released on Tuesday.

The news that inflation has slowed from April’s 4.9% annual rate to the lowest annual level in about two years shows notable progress since last June’s peak of 9.1%. Nevertheless, the 4% annual inflation rate remains above the Federal Reserve Board’s 2% target.

The Fed, which has aggressively raised interest rates 10 times in the last 14 months to cool down the economy and curb inflation, has previously signaled that it would pause further interest rate increases at the conclusion of its June 13-14 meeting.

Although the May CPI report was good news and seen as unlikely to change that plan, the Fed could still resume raising interest rates later this year if progress does not continue.

The stock market was up in early trading after the CPI data was released.

The U.S. Bureau of Labor Statistics (BLS) said the 4% all-items index increase for the 12 months ending May was the smallest 12-month increase since the period ending March 2021.

However, when the more volatile food and energy index is excluded, the CPI has risen 5.3% over the past 12 months. The energy index has decreased 11.7% for the 12 months ending May, and the food index has increased 6.7% over the past year.

Viewed on a monthly basis, the shelter index (+0.4%) was the largest factor in the monthly increase in the index for all items less food and energy, the BLS said. Housing-related costs make up about one-third of the overall CPI weighting.

Among the other indexes that rose in May on a monthly basis were the cost of used cars and trucks (+4.4%) and motor vehicle insurance (+2%). The indexes for apparel, personal care, and education also increased in May.

Viewed on an annual basis, the shelter index has increased 8% over the 12-month period ending in May, accounting for over 60% percent of the total increase in all items less food and energy. Other indexes with notable increases over the last 12 months include motor vehicle insurance (+17.1%), recreation (+4.5%), household furnishings and operations (+4.2%), and new vehicles (+4.7%).

Gasoline prices are down 19.7% over the 12-month period ending in May. Natural gas has declined 11% and airline fares are 13.4% lower than a year ago.