Inflation high now

Inflation in May rose 4 percent from a year ago, down from April’s 4.9 percent annual rate and meaningfully lower than the 9.1 percent reading in June, according to data from the Department of Labor. That slowdown has been helped by cooling food and energy prices — but when excluding those more volatile categories, prices are up a bigger 5.3 percent from a year ago, the data also shows. It’s having a measurable impact on consumers’ wallets. Back in January, for example, the typical consumer would have had to spend $395 more a month to purchase the same goods and services bought a year ago, according to a Moody’s estimate from the month’s consumer price index (CPI) release. It’s also taking longer than economists — and Federal Reserve officials — ever expected for price pressures to cool. Fed Chair Jerome Powell mentioned after the Fed’s May rate-setting meeting that officials don’t think inflation will come down to their preferred annual level of 2 percent quickly, as so-called “stickier” services categories contribute to price pressures the most. It’s putting pressure on U.S. central bankers to keep rates higher for longer. One silver-lining: For the first time since March 2021, workers’ wages in May climbed by a faster pace over the past 12 months than inflation did, additional Labor Department data shows. But the pain of inflation is far from over, and the game of catch may just now be beginning. Americans have had to make major financial sacrifices just to make ends meet during the recent bout of price pressures, Bankrate data reveals. Inflation hasn’t yet shaken its reputation for being higher and more stubborn or persistent than liked.— MARK HAMRICK, BANKRATE SENIOR ECONOMIC ANALYST

Key statistics

Inflation rose 4 percent in May 2023, down slightly from 4.9 percent in April and a 9.1 percent peak in June as measured by the CPI. (BLS) Food prices rose 6.7 percent year-over-year in May 2023. (BLS) Energy prices declined 11.7 percent year-over-year in May 2023, aided by falling gasoline and oil prices. (BLS) Gasoline prices declined 19.2 percent from a year ago but are still up 86 percent from the pandemic-era low. (BLS) Core inflation – that is, inflation without volatile food and energy prices – rose 5.3 percent year-over-year in May 2023. (BLS) Rent of primary residence climbed 8.7 percent in April 2023 from a year ago. (BLS) Average hourly earnings in May are up 4.3 percent over the past year, marking the first time since March 2021 that wages climbed at a faster pace than price pressures. (BLS) More than 3 in 5 workers (or 61 percent) in August 2022 reported receiving a raise, a higher-paying job or both over the past 12 months. (Bankrate) Despite these raises, a majority (55 percent) of Americans say their wages have not kept up with the rise in household expenses. (Bankrate) Workers with lower earnings and less education were more likely to find a better-paying position, while pay raises skewed more toward higher earners and the most highly educated. (Bankrate) More than half (56 percent) of the workforce is likely to look for a new job in the next 12 months, up from 51 percent in 2022. (Bankrate)