The Consumer Price Index (CPI) was unchanged in May, a welcome, surprising development that has fortified optimism for a rate cut by the fall.

Ushered in by falling prices for energy and a leveling of grocery costs, the flat inflation numbers reported by the U.S. Bureau of Labor Statistics made May the first month since July 2022 in which the overall CPI did not increase. The reading beat expectations, with economists polled by Reuters anticipating an modest 0.1% increase.

In the year through May, the CPI — one of the most watched inflation measures by experts attempting to forecast the Federal Reserve’s monetary policy movements — is up 3.3%, down a tenth from the 3.4% annual pickup in April. That’s far below the inflation peak of over 9% in June 2022, though it remains handily above the 2% goal targeted by the Fed.

Still, May’s figures are rated as a victory by many observers, building on the modest easing seen one month prior. Gasoline prices were the big mover in May, falling 3.6% after an April uptick of 2.8%. Energy services prices were down as well, though just modestly at 0.2%.

Grocery prices were flat, with price drops in milk and nonalcoholic beverages balancing out increases in the prices of various proteins and cereals. The inertia in grocery food price inflation offset the increase in food eaten away from home, leading to only a 0.1% increase in food costs.

Core inflation, which doesn’t include the volatile energy and food sectors, was up just 0.2%, the smallest uptick since August 2021. The stark slowing of core services inflation was an especially positive sign, rising just 0.2% in May, lowest since September 2021. Take shelter out of the equation and the calculus is even more encouraging; without primary shelter, core services were flat. The cooling of shelter inflation, which accounts for a large part of the total CPI calculation due to weighting, remains stubbornly glacial. Rents and owners’ equivalent rents were each up 0.4% in May.