US data from June showed that inflation cooled last month, though it’s likely not enough to stop the Federal Reserve from further hiking interest rates.
The Consumer Price Index — a closely-monitored measure of inflation that tracks changes in the costs of everyday goods and services — rose 3% in June versus a year earlier, according to data released by the US Buerau of Labor Statistics on Tuesday.
That was short of the 3.1% increase economists expected and is the smallest advance since March 2021. The number was also lower than May’s 4% increase
Last June, inflation had peaked at 9.1%.
The core CPI — which excludes volatile food and energy prices — rose 0.2% from a month ago, marking the smallest one-month increase in that index since August 2021, the Bureau of Labor Statistics reported.
Core CPI excluding food and energy costs was up 4.8% over the last 12 months, lower than the 5.0% increase economists expected.
Shleter was the largest contributor to last month’s increase — accounting for more than 70% of the rise — followed by motor vehicle insurance, apparel, recreation and personal care.
The airline fares index saw the steepest decline in June, falling 8.1% month-over-month.
The latest figures come after the Fed agreed to hold interest rates steady at 5% to 5.25% at the June meeting as a way to buy time and assess whether further rate hikes would be needed.
“Almost all” Fed officials reportedly agreed on the pause — which comes after a 10-meeting streak of rate hikes.
However, “some participants” wanted to move ahead with a rate hike in an effort to reach the bank’s 2% inflation goal.
Fed Chair Jerome Powell has also said that “the process of getting inflation back down to 2% has a long way to go.”
The contrast between the Fed’s stated concern over still-high inflation and its decision to skip a rate hike has heightened uncertainty about its next moves.
Thus, the central bank is expected to continue to hike rates in July, and there’s about a one-in-three chance of another increase before the end of the year.
This story originally appeared on NYPost
