June Inflation Rate Declines, Potentially Easing Fed’s Decision on Interest Rates
The inflation rate saw a slight decrease in June, offering potential support for the Federal Reserve to consider lowering interest rates later this year. The Labor Department reported Thursday that the consumer price index (CPI), which tracks the overall cost of goods and services across the U.S. economy, fell by 0.1% from May, resulting in a 12-month rate of 3%. This annual rate marks its lowest level in over three years.
The all-items index rate dropped from 3.3% in May, when it was stagnant on a monthly basis. When excluding the often volatile food and energy sectors, the core CPI rose by 0.1% monthly and 3.3% annually, slightly under the anticipated increases of 0.2% and 3.4%.
The annual rise in the core rate is the smallest since April 2021. Noteworthy, a 3.8% decrease in gasoline prices tempered monthly inflation, counteracting 0.2% upticks in both food and shelter costs. Housing-related expenses, comprising about one-third of the CPI, saw a slowdown in their rate of increase—an encouraging signal in the fight against inflation.
The stock market reacted positively to the news, with futures seeing an upward trend, while Treasury yields plummeted. The decline in energy prices coupled with modest increases in shelter costs helped in this positive shift. Additionally, used vehicle prices dropped by 1.5% for the month and were down 10.1% compared to the previous year. Used cars had been a significant factor in the initial surge of inflation back in 2021.
Overall, the June inflation data presents a cautiously optimistic picture for the Federal Reserve as it navigates its future monetary policy decisions.
Stay tuned for further updates on this developing story.
Original Story https://www.cnbc.com/2024/07/11/cpi-inflation-report-june-2024.html
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