June Inflation Report – Telemundo Miami (51)

U.S. price growth slowed more than expected in June, providing further evidence that high inflation has eased and potentially opening the way for the Federal Reserve to cut key interest rates on everything from mortgages to credit card payments.

The consumer price index increased 3% over the past year (June 2023 to June 2022), down from 3.3% last month. Similarly, the monthly measurement from the Bureau of Labor Statistics showed inflation fell 0.1% from May.

A 3.8% drop in gasoline prices tamed inflation in June, offsetting a 0.2% rise in food and housing prices. Housing costs have been one of the most resilient components of inflation, accounting for about a third of the CPI’s weight, so the slowdown is another positive sign.

Thursday’s report comes after Federal Reserve Chairman Jerome Powell testified on Capitol Hill this week. The central bank chief did not say when exactly the rate cuts would begin.

However, Powell said the Fed views the risks to the economy as more balanced between inflation and recession and that the Fed does not need to wait until inflation reaches 2% to cut rates.

EXPECTATIONS Ahead of the Federal Reserve Statement

The Federal Reserve has highlighted recent signs of slowing inflation, highlighting data that suggests the labor market and broader economy may be cooling.

If they continue, both trends could lead the Fed to cut its benchmark interest rate in the coming months from a 23-year high of 5.3%.

But officials also cautioned that more evidence is needed that inflation is returning sustainably to the Federal Reserve’s 2% target, and they said they are in no rush to lower borrowing costs.

“The latest inflation numbers have shown some modest progress, and better data would strengthen our confidence that inflation is on track to be sustainably approaching 2%,” Federal Reserve Chairman Jerome Powell said last week during testimony before the Senate Banking Committee.

But the inflation report contrasts with another figure: the unemployment rate is now 4.1%, the highest since the post-pandemic period and a level not seen since February 2018, excluding the rise in unemployment due to the coronavirus pandemic.

While experts say a recession is not inevitable, there is growing concern that the unemployment rate has risen for three months in a row.