May's Consumer Price Index (CPI) was cooler than expected, unchanged from April's print. Yahoo Finance's Dani Romero, Brooke DiPalma, and Pras Subramanian break down the sectors hit hardest by inflation.

Despite shelter remaining a "sticky component of the inflation picture," economists believe disinflation is underway. Shelter posted a 0.4% monthly gain in May's CPI, making it the fourth consecutive month of gains. Year over year, shelter came in at 5.4%, much lower than March's peak of 8.2%. The shelter index makes up a third of the overall CPI, and economists at Goldman Sachs expect shelter to come in at 4.9% on a yearly basis, signaling an overall cooling.

Overall food inflation in May increased 2.1% year over year, and 0.1% month over month. The cost of dining out has continued to increase, jumping 0.4% from April. Under this pressure, consumers have become increasingly value-focused, looking for deals and choosing to swap out some home staples for generic versions.

On the other hand, the autos sector is seeing some relief as both new and used vehicle prices are down year over year. While auto insurance is up 20.3% year over year, it decreased 0.3% from April, signaling an overall moderation.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Melanie Riehl

Video Transcript

Futures are jumping this morning after me.

Inflation print coming in cooler than expected.

Now we are taking a deeper dive into three sectors that have been hit by sticky inflation.

We're talking shelter, food and autos team coverage here for you to break it all down.

Yahoo Finance is Danny Romero Brook and Pro a subman standing by.

Danny.

Let's start with you.

You're watching shelter, obviously a key component here within this print.

What did you find this month?

Sea.

A shelter still remains a sticky component of the inflation picture, but economists tell me that this inflation in shelter is under way.

Now if we take a look at those numbers, Shelter posted 8.4% monthly gain.

That is the fourth consecutive month of monthly gains, and on a yearly basis, shelter came in at 5.4% and that is much lower than marches peak of eight 0.2%.

So we are seeing that cool down now.

Remember, the shelter index makes up a third of the overall CP I basket, and there are two components that economists really pay attention to when it comes to this index and that holds the biggest way, and that is O owners equivalent rent.

That's the hypothetical rent that you would earn if you rented out your property and rent, which lags real time rent data because the government rent data every six months, which creates this lagging effect.

So if we take a look at those numbers, OE are owners.

Equivalent rent posted a 0.4% monthly gain last month, and rents came in at 0.3% on a monthly gain.

Now the reason we've seen Rent growth really moderate is because there's been so much apartment supply that has been added to the market.

But due to the fact that rates have stayed this high, some industry experts do expect some downside risks ahead because there has been this pullback in construction activity that will put some downward pressure on supply.

So they are saying that this could result in another hurdle for the Fed, who has been expecting housing costs to come down.

But overall, economists at Goldman Sachs are expecting that overall inflation to uh range between 0.3% by December of this year and on a yearly basis, they're expecting a shelter, the shelter component to come in at 4.9%.

So we are in the right direction.

Like I said, disinflation in the shelter component is underway.

Shana.

All right.

I'll take it from here.

Danny, Thanks so much.

And, Brooke, you're standing by.

You're watching.

Oh, man.

Food.

We love to hear it.

We love to see it.

How much more expensive, though?

Was it to eat out?

Well, Americans continue to feel the brunt when it comes to the cost of food.

We did see that number.

Uh, take a bit of a different turn this morning we saw in the month of May.

Overall food inflation increased 2.1%.

Now, month over month.

As you can see right here, we saw the number increase 0.1%.

Now, that comes from a previous month.

We saw that flat month over month.

And when you take a look at the cost of groceries and the cost of dining out, we did see the cost of groceries inflation flat month over a month.

That's previously compared to a monthly decline of 0.2%.

Now, the cost to dine out something that we've been watching really closely is the cost of food and labour.

Commodities continue to increase.

We saw the cost to dine out jump 0.4% last month.

That's higher than the previous monthly increase of 0.3 percent.

And this report comes as consumers are beginning to really push back here when it comes to shopping at retailers and when it comes to shopping at or rather going to dine out, what we begin to see here is both retailers and fast food chains take action.

We did hear from Target last month that they plan to cut prices or lower prices on 5000 items.

1500.

Those items have already been marked down, and those are on everyday goods that consumers are really going to think.

Paper towels, think milk, think meat.

We also heard from fast food chains like KFC, McDonald's and Burger King.

They all announced a $5 value meal menu as they really looked to entice these inflation weary consumers to come back in the door and choose to dine out over going to the grocery store.

Brad back to you.

All right, Brooke, let let me pick it up from here because we also want to quickly take a look at the vehicle prices because we're actually seeing some relief within this print here.

Price, you've got the latest on that for us.

Yeah.

New and so new news prices both down year over year.

Used prices picking up just a little bit months.

So a little mixture.

But the numbers overall.

New cars down a half percent, uh, for the month and down 8/10 of a percent year over year.

That's both down compared to April and used car prices up a little bit there.

6/10 of a percent, but down 9.3% a year of the year.

Now.

That figure is up compared to April, of course, but down year of the year.

So you know what we're seeing is a continued moderation there, a little blip there with use because potentially there'll be some noise there with people coming in the in the market in the in the spring months to buy new vehicle to buy used vehicles.

Typically, you do that after they get their tax, uh, tax returns.

But overall, for months now, we've been seeing both new and used going down, down, down, down down.

And maybe that used Price Po popping up just a little bit because prices were so low and pros while we have you.

I mean, you've teed up the discussion here, especially thinking about autos.

I mean, I'm zeroing in on some of those auto insurance prices and the reason why we posted our graphic last print of everywhere.

Inflation is and isn't.

And that was what got the biggest response.

People talking about their auto insurance prices here.

And you know, one of the things that jumped out to me year over year.

Yeah, still up 20.3%.

But then you look at that month over month adjusted.

We started to see that decrease just a hair a smidge down about 1/10 of a percent.

And I was excited to talk with you about this process because we got some fresh data out from JD power yesterday on a survey.

With repair costs still rising, more than 20% of vehicles involved in collisions now considered total write offs.

Insurers are actually still losing money, so that is really playing in to where some of those prices are certainly, uh, pressuring both the insurers as well as some of the new or used car owners out there as well.

Yeah, you know, with the insurance, there's a There's a lag there because a lot of states regulated by by by regulators and they have to tell, actually approve price hikes.

So a lot of the insurers had to wait longer and longer to hike those rates, and and it took a long time for them to do so.

And they're still doing that.

And and people are getting their new the new premium So they can't believe how high things are because they had to kind of catch up to where they were.

And you're absolutely right about repair costs, especially for EVs things like that.

More highly tech packages and pro and products.

Those cost a lot more money to repair than your old you know.

67 Chevelle.

Yes.

Uh, well, I had to sell that before I came to New York Pros.

Thank you so much for taking the time.

Danny, Mattie and pros appreciate the breakdown here on these three core areas of the CP I print