CONSUMER PRICES.
Wallace 6-23 [Alicia Wallace, reporter for CNN; 6/13/23, “CPI report: US inflation is coming back down to Earth”, CNN, https://www.cnn.com/2023/06/13/economy/cpi-inflation-may/index.html DOA 6/26/23] nmui
US inflation is leaving those sky-high days behind: Consumer prices in May rose at the slowest annual pace since March 2021, according to data released Tuesday by the Bureau of Labor Statistics.
The Consumer Price Index, a key inflation gauge that measures price changes for a basket of goods and services, increased 4% for the year ending in May.
That represents a sharp pullback from April’s 4.9% and is slightly below economists’ expectations for a 4.1% gain, according to Refinitiv. On a monthly basis, prices ticked up 0.1%. Economists were expecting prices to increase by 0.2% from April to May.
It’s the 11th consecutive month that inflation has slowed, and it’s a welcome reprieve from the painful shock of persistently high inflation endured during the past two years. This time last year, that CPI print was more than double at 8.6%.
“It’s another step in the right direction,” Nancy Vanden Houten, lead US economist at Oxford Economics, said in an interview with CNN.
A drop in energy prices and a slowdown in food price hikes helped bring down the headline number, as did the influence of what is known as base effects: A year ago, inflation was marching upward and setting fresh 41-year highs before topping out at 9.1% in June.
While 4% is a far cry from 9.1%, it’s also still well above the desired inflation target for the Federal Reserve, which has been in the throes of a historic monetary tightening campaign since March 2022. The Fed would like to see inflation (as measured by the core Personal Consumption Expenditures index) settle in at 2%.
“Inflation is still much too high, but the trend is in the right direction, and the Fed is ready to take a break from raising interest rates,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said in a statement. “They’ve raised rates for 10 consecutive meetings in a row and the [5 point] increase is the most and fastest pace in decades, so they want to wait and see if their actions are sufficient to keep inflation moving in the right direction.”