Annual inflation cools to just 3 percent, government reports

The Department of Labor on Thursday reported that the annual Consumer Price Index dropped from 3.3 percent in May to just 3 percent in June. The annual Consumer Price Index in May lowered slightly compared to April, the department reported. Setting aside volatile food and energy costs, consumer prices rose roughly 3.3 percent over the year ending in June. But the department said that was the lowest increase in that index since April 2021.

Are these reports actually reliable? The reports measure only urban consumers and wage earners. The report’s numbers do not take into account the consumer prices confronting rural populations, farmers, and those in the armed forces.

What do these numbers mean? The Federal Reserve has refused to lower borrowing rates since last July in a bid to shove inflation down to 2 percent. The central bank’s key interest rate has perched at around 5.25 - 5.50 percent. Federal Reserve Chairman Jerome Powell said in June that the Fed would not lower interest rates until it had seen persistent evidence inflation was headed downward. Economic data up to that point had not given central bank officials the impression inflation was lowering sufficiently, he said.

Dig deeper: Listen to Nick Eicher and David Bahnsen’s Monday Moneybeat discussion on The World and Everything in It podcast about the state of the economy.