inflation decelerated more than expected in may bolstering investor optimism regarding the conclusion of fed rate hikes the us consumer price index cpi rose 4 yearonyear in may down from 49 in april according to figures released by the bureau of labor statistics on tuesday the muchawaited inflation report came in slightly below the 41 average economist expectation and marks the lowest inflation reading since march 2021 inflation falls in may what you need to know   the annual cpi inflation rate was 4 last month falling from the 49 recorded in april and coming in below the 41 predicted by analysts   on a monthly basis the cpi increased by 01 in may slowing from a 04 increase in april the figure was below the 02 forecasted by economists   falling energy prices continued to drive down overall inflation in may the energy index declined 36 in may and is down 117 compared to a year ago   food prices ticked 02 higher on a monthly basis and were 67 higher than a year ago   core inflation which excludes volatile food and energy goods from the cpi basket increased 53 yearonyear down from april’s 56 reading but slightly above the 52 expected   the monthly core inflation print was 04 which was in line with both april’s figure and the consensus 04 estimate   services items continue to contribute to overall cpi inflation with shelter rising 04 on the month and 8 yearonyear   the inflation report is expected to bolster the case for a pause in the fed’s tightening cycle on wednesday read also us stocks poised for gains ahead of inflation data analyst says aidriven rally masks cautious undertone prior to the may cpi report the market was highly skewed toward the fed holding rates steady in june with the cme group fedwatch tool assigning an 81 chance of this event after the cpi release investor bets on a fed rate pause in june rose to 964 the dollar as closely tracked by the invesco db usd index bullish fund etf uup fell substantially by 05 in the minutes following the may cpi data sp 500 futures jumped 03 as investors reaffirmed their conviction the fed will hold interest rates unchanged the spdr sp 500 etf trust spy tracks the sp 500 index treasury yields sharply dropped with the 10year yield down 5 basis points to 369 and the twoyear yield down 7 basis points to 451