A measure of consumer prices that is closely monitored by the Federal Reserve fell last month to its lowest level since March 2021, the latest sign that inflation in the United States is steadily cooling from its once-painful highs.

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WASHINGTON (AP) — A measure of consumer prices that is closely monitored by the Federal Reserve fell last month to its lowest level since March 2021, the latest sign that inflation in the United States is steadily cooling from its once-painful highs.

The inflation report that the Commerce Department issued Friday also showed that Americans’ willingness to keep spending, despite two years of high inflation and 11 Fed rate hikes over 17 months, remains a powerful driver of the economy.

Consumer spending rose 0.5% from May to June, up from 0.2% the previous month.

This can occur as persistent consumer demand enables more companies to raise prices, thereby keeping inflation above the Fed’s target and potentially causing the central bank to raise rates even higher.

Powell declined to offer any signal of the central bank’s likely next moves.

The Fed’s policymakers consider core prices a better measure of where inflation might be headed.

  • SeaJOP
    61·
    1 year ago

    Overall prices will increase slightly and at a slower ratewhich is fine. We do not want prices to decrease overall. That causes a whole host of issues. What we want is low, consistent inflation so that you know roughly what prices will be next year.

    Some things will decrease in price, of course, but overall prices went up very slightly. One other thing to note is that this specific indicator does not take food and energy prices into account. There is another indicator for that.