If Federal Reserve officials are looking for signs they may finally be wrestling a stubborn inflation rate to the ground, they may have gotten it in June.
The government reported that the Consumer Price Index climbed at a moderate pace in June compared with a year earlier and fell on a monthly basis. Overall inflation was 3 percent in June on a yearly basis, down from 3.3 percent in May. That’s softer even than the 3.1 percent economists had forecast in a Bloomberg survey, according to a report in the New York Times.
It was also far cooler than inflation’s 2022 peak of 9.1 percent.
After stripping out food and fuel prices, the “core” price index climbed 3.3 percent compared to a year earlier, down from the previous report, the Times reported. Some highlights, according to the Times:
- Overall, prices dropped 0.1 percent from May.
“This is the inflation report that we’ve been waiting for,” Neil Dutta, head of economic research at Renaissance Macro, told the Times.
- The Fed has held borrowing costs at relatively high 5.3 percent for the past year to cool the economy by weighing down demand for big, debt-funded purchases
- Investors increasingly think that the central bank will lower borrowing costs at its Sept. 17-18 meeting
- Fed officials are focused on striking the right balance:
“If we loosen policy too late or too little, we could hurt economic activity,” Fed Chair Jerome Powell said during his semi-annual testimony to Congress earlier this week.
- Prices of travel-related services like airline fares and hotel rooms fell, and a range of other service costs climbed more slowly. Goods prices continued to remain flat or fall in June.
- The unemployment rate has ticked up to 4.1 percent, up from 3.6 percent last June. Employers have fewer unfilled job openings, and wage growth is cooling.
“Elevated inflation is not the only risk we face,” Powell told Congress.
