June Consumer Price Index Overview

The Consumer Price Index is projected to have increased at a moderate pace in June, which would be reassuring for Federal Reserve officials closely monitoring inflation levels. Economists suggest that overall inflation likely stood at 3.1 percent on an annual basis in June, slightly down from May’s 3.3 percent, marking the lowest reading since January.

When excluding food and fuel prices to gauge the underlying trend, the core price index is expected to have risen by 3.4 percent compared to the previous year, maintaining the same level as the previous report. On a monthly basis, economists anticipate a mere 0.2 percent increase in core inflation, aligning with the figure reported for May.

Federal Reserve policymakers have been observing inflation indicators to assess whether inflation is easing as they deliberate on potential interest rate adjustments. The central bank has kept borrowing costs at 5.3 percent for the past year to temper the economy by curbing demand for significant purchases that rely on loans, such as homes and vehicles.

Initially planning to implement multiple rate cuts in 2024, policymakers were hindered by persistent inflation figures earlier in the year. Presently, they are leaning towards one or two rate reductions by year-end. Nevertheless, recent data suggests that price pressures are showing signs of moderation once more.

The upcoming inflation report is poised to reveal a notably cooler rate compared to the peak of 9.1 percent observed in 2022, indicating a potential downward trend in inflation levels.