Reported inflation dipped to its lowest annual rate in more than two years this past month.
Conveniently what the 0.2% rise does NOT include is the cost of Energy and Food, the 2 most necessary components of our existence.
The consumer price index, which measures inflation, increased 3% from a year ago, which is the lowest level since March 2021.
On a monthly basis, the index, which measures a broad swath of prices for goods and services, rose 0.2%.
That compared with Dow Jones estimates for respective increases of 3.1% and 0.3%.
Stripping out volatile food and energy prices, core CPI rose 4.8% from a year ago.
In sum, the numbers could give the Federal Reserve some breathing room as it looks to bring down inflation that was running around a 9% annual rate midyear of 2022, the highest since November 1981.
Central bank policymakers tend to look more at core inflation, which is still running well above the Fed’s 2% annual target.
Fed officials expect the inflation rate to continue falling, particularly as costs ease for shelter, which makes up about one-third of the weighting in the CPI.
However, the shelter index rose 0.4% last month and was up 7.8% on an annual basis. That monthly gain accounted for about 70% of the increase in headline CPI.
Traders are still pricing in a strong possibility that the Fed will enact a 1/4 percentage point rate hike when it meets towards the end of July.
Inflation turned out not to be so “transitory” as we were told it was going to be, proving much more stubborn than anticipated, the Fed began hiking, ultimately raising benchmark rates by 5 percentage points through a series of 10 increases since March of 2022.
Energy prices increased 0.6% for the month. However, the energy index decreased 16.7% from a year ago, a time when gasoline prices at the pump were running around $5 a gal.
Food prices rose just 0.1% on the month while used vehicle prices, a primary source for the inflation surge in the early part of 2022, declined 0.5%.
Airline fares fell 3% on the month and now are down 8.1% on an annual basis.
Average hourly earnings, adjusted for inflation rose 0.2% from May to June and increased 1.2% on a year-over-year basis.
The inflation surge that peaked a year ago, wages had run well behind the cost-of-living.
The fact of the matter is, there isn’t much we can do to control inflation. Also, prices for energy, goods and services are very unlikely to unwind all the way back to pre-covid prices.
What we can do is earn more money. There is an infinite amount of money out there, more than enough to go around. You just have to be in the business to access it.
Perhaps you’re in the markets and are struggling? Perhaps you’re on the sidelines? Perhaps you’re interested and just don’t know where to start?