U.S. inflation rate stays higher than goal, government reports

The Federal Reserve will keep its key interest rates at around 5.25-5.5 percent, it said Wednesday. Central bank officials do not yet have confidence that inflation is heading sustainably down toward the Fed’s goal of 2 percent, according to the Fed’s statement. The Fed plans to remain attuned to the economic outlook and be prepared to respond to any changes. It has also kept interest rates steady at that range for its last seven meetings over nearly a year.

What’s going on with inflation right now? Earlier on Wednesday, the Department of Labor reported that the annualized month-to-month inflation rate for May sat at 3.3 percent—matching April’s inflation rate. The 12-month inflation rate clocked in at the same rate in May, down slightly from April’s number of 3.4 percent. Excluding volatile food and energy costs, month-to-month prices rose slightly in May, but less than they rose in April.

Is this data reliable? The data comes only from what the department defines as urban areas, where 90 percent of American spenders are located, according to the Department of Labor. It measures the change in how much consumers are paying for items such as food, gas, clothes, drugs, and services. The department says its reports are subject to statistical error because they are based on samples of retail prices rather than an exhaustive list of all retail prices. The department tries to avoid statistical errors by repeated sampling and testing its hypotheses.

Dig deeper: Listen to Nick Eicher’s discussion with David Bahnsen on The World and Everything in It podcast about how the U.S. economy is unlikely to fall into a recession.