Inflation cools again in June in another positive sign for US economy

Consumers can take a deep breath as the Consumer Price Index finally fell 0.1% last month, though core prices rose by 0.1% in June, the Labor Department shared on Thursday.

The new data shows that increased prices began to fall last month, a key sign that things are moving in the right direction for the Federal Reserve.

The CPI rose by 3% in the 12 months through June, compared to 3.3% in May, meaning we are closer to potential rate cuts as the percentage goal set by the Central Bank grows closer.

The core measure, which excludes volatile prices like food and energy, rose by 3.3%, the smallest 12-month increase since April 2021.

Compared to May numbers, the CPI was flat that month, while the core CPI rose 0.2%.

Driving got a little cheaper last month, as prices fell by 3.8% and used vehicles went down 1.5%, the report shared. On the other hand, shelter costs remained high, rising 0.2% in June.

While inflation was headed downward last fall, its progress came to a screeching halt in the first four months of 2024, pushing rate cut projections from this summer to this fall.

Federal Reserve chair Jerome Powell said that the bank isn’t ready to move on rate cuts just yet, as it wants more evidence that price gains are slowing.

“After a lack of progress toward our 2% inflation objective in the early part of this year, the most recent monthly readings have shown modest further progress,” Powell told lawmakers this week.

So, while Americans are ready to have pressure ease in the housing market, on their credit cards, or any other rate, Powell says more time is needed.

“More good data would strengthen our confidence that inflation is moving sustainably toward 2 percent,” Powell said.