Jul 12, 2023 - Economy

Inflation falls to 3% in June, lowest since March 2021

Data: Department of Labor; Chart: Axios Visuals

The Consumer Price Index rose 3% in the 12 months through June — the smallest increase since March 2021 — while the gauge excluding fuel and food costs rose 4.8%, the government said Wednesday.

Why it matters: Overall inflation has plunged from a peak of 9% last summer, a relief for American consumers. The core measure, watched by economists, also showed notable signs of cooling in June.

Driving the news: The 12-month change in overall CPI cooled rapidly from the 4% registered in May. Core CPI also edged down from May's 5.3%.

  • On a monthly basis, overall CPI rose 0.2% compared to the 0.1% rise in May. The core measure that economic policymakers keep an eye on also rose 0.2%, a much slower pace than the 0.4% notched in the previous three months.

Details: Sharply lower energy prices continue to be a major factor pulling down overall inflation. Gasoline prices, for instance, are down 26.5% compared to a year ago.

  • Used cars and trucks, a category that helped lead the way as prices across the nation started to soar, are down 5.2% compared to a year ago. In June alone, prices fell 0.5%. (New vehicles, meanwhile, were flat.)

Of note: Rent price increases showed no sign of slowing— rising 0.5% in June, the same pace as the previous month. Shelter costs have put upward pressure on inflation.

  • Private data has suggested that nationwide rental prices have climbed at a more subdued pace.
  • Economists expect that development to be reflected in official government data and cool core inflation further down the line.
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