Inflation slowing now

Greg Iacurci, “Here’s the inflation breakdown for June, in one chart,” CNBC, 7-12-2023, https://www.cnbc.com/2023/07/12/heres-the-inflation-breakdown-for-june-in-one-chart.html-- 嘉玮

Inflation slowed sharply in June to its slowest pace in more than two years, translating to less of a pinch on the average consumer’s wallet thanks to price relief across categories like energy, groceries and housing.

Inflation measures how quickly prices are changing across the U.S. economy.

The consumer price index increased 3% in June relative to a year earlier — a slowdown from 4% in May, according to the U.S. Bureau of Labor Statistics.

The CPI is a key barometer of inflation, measuring prices of anything from fruits and vegetables to haircuts and concert tickets. June’s reading is the smallest 12-month increase since March 2021 — around the time when alarm bells started sounding about fast-rising prices in the pandemic era — and a significant pullback from 9.1% in June 2022.

The report “makes a strong case that inflation is headed back into the bottle,” said Mark Zandi, chief economist at Moody’s Analytics.

Easing price pressures thus far are largely attributable to the fading effects of supply shocks caused by the Covid pandemic and the Russian war in Ukraine, Zandi said.

The decline in the inflation rate doesn’t mean household expenses have fallen in aggregate; it means they aren’t rising as quickly.

And that’s good news for consumers: The average worker’s earnings growth is now outpacing inflation, translating to an increase in their standard of living after two years of declines. Hourly earnings increased 0.2%, on average, from May to June after accounting for inflation, according to BLS data.

While inflation is on a downward trajectory, it remains above the Federal Reserve’s long-term target of around 2%.

“I think inflation is moving to a better place, but we’re not in the Promised Land of the 2% target,” said Mark Hamrick, senior economic analyst at Bankrate. “We know the journey is progressing, but it’s not yet over.”

‘Encouraging’ inflation signals moving forward

The inflation slowdown has been broad-based, Zandi said.

“It’s food, it’s energy, vehicle prices, the cost of housing is slowing,” he said. “Pretty much across the board, we’re seeing a moderation in price increases.”