Prices are still rising, but the new inflation report shows some relief

Average prices for US consumer goods and services are still rising, but annual inflation fell to 3.3% in May, according to the latest federal data.

Wednesday’s Consumer Price Index report from the US Labor Department found that overall annual inflation eased slightly from April’s 3.4% rate, but some categories continued to track at a much faster pace, including costs related to housing which increased by 0.4% month on month. May and have increased by 5.4% from a year ago. Prices of food purchased outside the home also rose .4% last month and are 4% higher than this time last year. Food prices remained stable on a monthly basis in May and were 1% more expensive than 12 months ago.

Core CPI, a measure that excludes volatile food and energy prices, rose .2% from April to May, ending the month at 3.4%.

Helping to offset still-heated inflationary pressures in some areas of consumer spending were easing gasoline costs, which fell 3.6% from April to May and were 2.2% higher than this time last year and a drop of 2 % in general energy prices per month. base base

May’s measures of both headline and core inflation came in lower than most economists expected.

Finally, some positive surprises as headline and core inflation beat forecasts, Robert Frick, corporate economist with Navy Federal Credit Union, told CNBC. There was relief at the pump, but unfortunately house and apartment costs continue to rise and remain the main cause of inflation. Until these housing costs begin their long-awaited decline, we won’t see big drops in the CPI.

Will the Fed cut interest rates?

The new data comes the same day the Federal Reserve’s rate-setting Open Market Committee wraps up its June meeting. The committee is expected to stay in line with the current federal funds rate range of 5.25% to 5.5%, but May’s inflation data is likely to fuel further optimism for a downward rate adjustment to come as early as September .

The CPI reading follows the latest Personal Consumption Expenditure report from the US Commerce Department, released late last month, which found that inflation was still up from March to April, but it was the most small monthly so far this year and annual inflation remained stable.

The headline PCE index is the Fed’s preferred metric when it comes to how the monetary body assesses inflationary impacts.

Near the end of last year, Federal Reserve Chairman Jerome Powell was sounding optimistic about the direction of the US economy and signaled that 2024 could see a series of downward adjustments to the monetary body’s federal funds rate.

But that rosy glow faded somewhat as the early months of the year saw inflation buck the steady downward trend that was in play for most of 2023 and instead pick up again.

And at the end of the Fed’s policy meeting in May, Powell said that inflationary resilience helped push the body’s Open Market Committee to back the pause on fixing a rate range that has been in play since July. past and is the highest in over 20 years.

Most economists expect the Fed’s rate-setting body to keep rates on hold at the conclusion of its two-day meeting on Wednesday.

#Prices #rising #inflation #report #shows #relief
Image Source : www.deseret.com

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top