Economy

Inflation takes a fall

Inflation hit the brakes in June, slowing to its lowest point since early 2021.

Why it matters: The worst of the inflation crisis appears to be behind us, offering consumers price relief across categories like energy, groceries, and housing.

Details: The consumer price index (CPI) slowed to 3% in June compared to with year earlier when it spiked to 9.1% - the highest since 1981. It also continued to trend down from last months high of 4%, according to the Bureau of Labor Statistics.

In English, please: Inflation lets us know how fast prices are changing across the U.S. economy, and the CPI is a key tool used to measure those changes.

• To calculate the CPI, the BLS analyzes price data on anything from eggs and milk to oil changes and concert tickets.

• This month’s data showed that although prices are still increasing, they’re doing so more slowly than they have since before the pandemic in 2021.

Zoom in: Food and energy prices are down across the board but they can be volatile. That’s why economists use a measure called the “Core CPI” - which hit a 20-month low of 4.8% - that strips out said categories to get a better understanding of inflation going forward. 

• The Core CPI includes the housing index, which was the largest contributor to inflation in June, making up 70% of the monthly increase.

• Economists are convinced that housing prices will continue to fall through the rest of the year, which should be the last piece of the puzzle to bring inflation under the Fed’s 2% benchmark rate.

Bottom line: While inflation is slowing, the Fed is still expected to raise interest rates at least one more time this year to reach their desired rate.

Business & Economy

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World

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US News, Politics, & Government

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Sports & Entertainment

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Science, Health, & Tech

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