Thursday, July 25, 2024

Inflation slows slightly, but cost of some goods, services climbs

(The Center Square) – Newly released federal inflation data showed that inflation slowed in recent weeks.

The U.S. Bureau of Labor Statistics released its Consumer Price Index, which showed that overall consumer prices paused in the month of May after rising 0.3% in April.

“Finally a pleasant surprise,” Jason Furman, a Harvard economist and former White House economic advisor during the Obama Administration, wrote on X, formerly known as Twitter. “Core CPI was 0.16% in May (2.0% annual rate). Headline was 0.01%. These are the best monthly readings since 8/21 & 7/22 respectively. Good news but caution: just 1 print & some fluky items.”

While the overall net increase was nearly null, several goods and services did become more expensive.

“The shelter index increased 5.4 percent over the last year, accounting for over two thirds of the total 12-month increase in the all items less food and energy index,” BLS said. “Other indexes with notable increases over the last year include motor vehicle insurance (+20.3 percent), medical care (+3.1 percent), recreation (+1.3 percent), and personal care (+2.9 percent).”

Overall, in May gas prices declined, but the price of shelter increased more than gas prices decreased.

“The index for food increased 0.1 percent in May. The food away from home index rose 0.4 percent over the month, while the food at home index was unchanged,” BLS said. “The energy index fell 2.0 percent over the month, led by a 3.6-percent decrease in the gasoline index.”

According to AAA, the price for a regular gallon of gasoline was $3.45, down from $3.62 a month ago but still much higher than the roughly $2.40 price when Biden took office.

Whether May’s numbers are part of a new trend or a blip on the radar remains to be seen.

“But still, this is unambiguously good news,” Furman said. “It gives me more hope about the last mile of inflation reduction. In my view it puts a second inflation-based rate cut in play for the year. Plus prices weren’t up for American families in May relative to April (seasonally adjusted).”