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Inflation rate fell more than expected in June Federal Reserve Prices remained uncomfortably high for millions of Americans.
The Labor Department said Thursday that the Consumer Price Index (CPI), a broad gauge of the prices of everyday items like gasoline, groceries and rent, fell 0.1% from the previous month in June, the first monthly decline since May 2020. Prices are up 3% from the same period last year.
Both figures were below the 0.1% monthly increase and 3.1% overall increase predicted by LSEG economists.
Another measure of underlying inflationary pressures in the economy also eased last month. So-called core prices, which strip out volatile measures like gasoline and food to give a more accurate gauge of rising prices, rose 0.1% in June. Compared to the same period last year, the measure was up 3.3%, the lowest since April 2021.
“It’s too early to declare victory, but any signs of normalization are welcome as the final stages of the fight against inflation are now being played out,” said Joe Brusuelas, chief economist at RSM.
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Overall, the report indicates that while prices are still above the Fed’s 2% target, inflation is loosening its stranglehold on the U.S. economy.
The weaker than expected report: Federal Reserve Policymakers are looking for evidence that high inflation is being effectively contained as they consider when to start cutting rates. Fed Chairman Jerome Powell said in congressional testimony this week that more “good” data on inflation would strengthen the case for cutting rates this year.
“The first quarter data did not support that great confidence, but the latest inflation measures point to some further progress and further better data will strengthen our confidence that inflation is sustainably heading towards 2 percent,” he said.
Fed won’t rush to cut rates until inflation is overcome, Powell says
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| Me: DJI | Dow Jones Average | 39765.01 | +43.65 | +0.11% |
| I:Comp | Nasdaq Composite Index | 18475.669988 | -171.78 | -0.92% |
| SP500 | S&P 500 | 5611.93 | -21.98 | -0.39% |
The report raised hopes that the central bank could cut interest rates as soon as September, sending stock futures soaring and bond yields falling on Thursday morning.
“The latest inflation readings are firmly pointing the way to a Fed rate cut in September,” said Seema Shah, chief global strategist at Principal Asset Management. “The smallest increase in core CPI since 2021 certainly suggests the Fed is confident that higher CPI will continue.” [in the first quarter] It’s a roadblock in the way and is building momentum for multiple rate cuts this year.”
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High inflation Severe financial pressures Most American households face high costs for everyday necessities like food and rent, and rising prices are especially devastating for lower-income Americans, who tend to spend more of their already tight paychecks on essentials and therefore have less flexibility to save.
Customers shop at a Safeway store in Mill Valley, California on June 11. (Justin Sullivan/Getty Images/Getty Images)
A 3.8% drop in gasoline prices last month helped offset 0.2% increases in food and rent costs.
Housing is one of the biggest drivers of inflation, but there are signs that housing costs are easing. Rents rose 0.43% this month, the smallest increase since August 2021 and up 5.2% from the same time last year. Rent hikes are coming from Rising housing costs It has the most direct and serious impact on household finances.
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Consumers also noticed an increase in food prices, one of the most immediate manifestations of inflation for many households, which rose 0.2% over the month, with groceries rising 0.1%.
