Inflation ticked down slightly year-over-year in June as rising prices continue to weigh on average Americans’ finances, according to the latest Bureau of Labor Statistics (BLS) release on Wednesday.
The consumer price index (CPI), a broad measure of the price of everyday goods, increased 3.0% on an annual basis in June and decreased 0.1% month-over-month, compared to 3.3% in May, according to the BLS. Core CPI, which excludes the volatile categories of energy and food, remained high, rising 3.3% year-over-year in June, compared to 3.4% in May.
Inflation peaked at 9% under President Joe Biden in June 2022 after rising from just 1.4% year-over-year in January 2021 and has since failed to drop below 3%. Economists expected inflation to increase by 0.1% in June and fall to 3.1% for the year, according to MarketWatch.
In response to high inflation, the Federal Reserve has set its federal funds rate to a 23-year high range of 5.25% and 5.50% in an attempt to slow the economy. A majority of investors as of Thursday morning do not anticipate the Fed will cut rates until the Federal Open Market Committee’s September meeting due to persistently high inflation, which has substantially raised the cost of credit for consumers and businesses, according to the CME Group’s FedWatch Tool.
The unemployment rate ticked up slightly to 4.1% in June as the U.S. economy added 206,000 nonfarm payroll jobs, with the largest share of growth due to a 70,000 gain in government employment. In testimony to Congress Tuesday, Fed Chair Jerome Powell noted that the job market appeared to be cooling, raising hopes that a rate cut could be on the horizon as the economy slows, according to ABC News.
Real gross domestic product (GDP) rose at an annual rate of just 1.4% in the first quarter of 2024, down from the 3.4% increase in the fourth quarter of 2023, according to the most recent estimate by the Bureau of Economic Analysis. The slowdown in growth, coupled with sticky inflation, has raised concerns that the economy could be in a period of stagflation, which wreaked havoc on Americans’ finances in the 1970’s and early 1980’s.
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