Annual inflation dropped to 3% in June, the lowest point in over two years, but remains higher than the target level set by the Federal Reserve.
The Breakdown: Consumer prices overall rose by only 0.2% from May to June, largely impacted by the Federal Reserve’s aggressive rate hikes.
* Rent and clothing prices saw an increase, but were offset by a drop in prices for air fare, used cars, and furniture.
* Gasoline prices went up 1% last month but are over 26% lower than last year when prices reached an all-time high of over $5 a gallon.
Eating Out vs. Eating In: The price of groceries remained steady, while restaurant meal costs rose by 0.4%.
* This increase in restaurant meal prices could be indicative of the inflation challenges still present in the economy.
Core Inflation: Once volatile food and energy prices are excluded, “core inflation” was calculated at 4.8% in June.
* This figure is well above the Federal Reserve’s target of 2%, indicating that inflation is still running higher than preferred despite recent decreases.
What’s next: The Federal Reserve is expected to raise interest rates again, likely by a quarter percentage point, at their forthcoming meet later this month.
* This expectation comes from the current state of inflation which, though easing, remains above the desired levels.
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