WILLIAM W. POTTER - STOCK.ADOBE.COM PHOTOGovernment data released yesterday showed that the Consumer Price Index pose 3% in June compared with the year before, and 0.2% compared with May, the smallest 12-month increase since March 2021. The last inflation report showed that prices rose 4% compared with the previous year.
Inflation eased in June to its slowest pace in more than two years, thanks to underlying price pressures cooling more than expected, according to reporting by the Wall Street Journal.
Inflation spiked to 9.1% in June 2022, and this June’s inflation figure dropped so much partly because the yearly data compares against last year’s peak, according to published reports.
Although inflation eased, it remains above the Federal Reserve’s 2% target, and officials have indicated they could raise interest rates at their July meeting, following signs of stronger-than-anticipated economy activity, according to published reports.
In May, officials kept the benchmark federal-funds rate in a range between 5% and 5.25%, the first pause after 10 consecutive increases since March 2022, when the rate was raised from near zero.
Core consumer prices, excluding the food and energy categories, rose 4.8% in June from a year earlier, the slowest pace since October 2021 and down from 5.3% in May.
Overall, consumer prices increased a seasonally adjusted 0.2% in June from the prior month, the smallest one-month increase since August 2021. Prices for used cars and airfares fell, but the cost of car insurance and recreational activities grew. Rent increased in June at the slowest one-month pace since early 2022.
Hiring slowed in June, and U.S. economic output rose at a 2.3% annual rate during the second quarter, according to the Atlanta Fed’s most recent estimates.
Loretta Mester, president of the Federal Reserve Bank of Cleveland, cautioned against getting too optimistic, saying that “it would be a mistake” to “declare victory” too early, according to reporting by The New York Times.
