WASHINGTON–Inflation cooled in June to its slowest pace in more than two years, according to new data released by the Bureau of Labor Statistics.
The data show the consumer price index (CPI) was up just 3% in June from one year earlier, and down significantly than the recent peak inflation rate of 9.1% in June 2022.
The June numbers are also down from 4% in May.
According to the BLS, prices were down for used cars and airline tickets, while rent increased at the slowest one-month pace since early 2022. Prices for car insurance and recreation services rose, the BLS said.
NAFCU: ‘Significant Downshift’
"Inflation continued to decline in June, with a significant downshift in core CPI,” said NAFCU economist Noah Yosif. “This decline was driven by housing, via falling rents, as well as used vehicle prices, which take time to respond to monetary policy, and will see further improvement as interest rates remain elevated.
“The improvement in consumer spending power could spark a reacceleration in inflation down the road, however; the decline in core inflation allows the Fed to be patient,” Yosif continued. “NAFCU anticipates that another report similar to this one will provide the dovish segment of the FOMC with plenty of support to argue for no further increases to the fed funds rate in the current cycle after the upcoming July hike."
CUNA: ‘Smallest Increase in Two Years’
“The headline inflation over the past 12 months decreased to 3% in June, down from 4% in May,” said CUNA Senior Economist Dawit Kebede. “The decline in prices for energy, used cars and trucks, and medical care services contributed to the slowdown. Energy prices decreased by 17% compared to June of the previous year. Core inflation, which excludes food and energy, increased by 4.8% over the past 12 months.
“Both the monthly headline and core prices also experienced a slowdown in June, with an increase of only 0.2%. This represents the smallest one-month increase in core prices in nearly two years,” Kebede continued. “Airfares, communication costs, and used cars and trucks were among the items that saw price declines during the month. On the other hand, prices for shelter, motor vehicle insurance, and recreation showed increases. The index for shelter is gradually slowing down compared to previous months, but it still accounted for 70% of the monthly increase in headline inflation.
“The CPI report for June indicates that inflation is coming down. This includes prices for core services, excluding shelter, which the Federal Reserve closely monitors,” Kebede added. “It also suggests that the Federal Reserve Open Market Committee does not need to raise rates during their meeting this month.”
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