CHICAGO — The latest inflation reports from the U.S. Bureau of Labor Statistics show positive signs for the U.S. economy, with inflation slowing and airfares falling significantly in June. Both the consumer price index (CPI) and producer price index (PPI) posted smaller increases than initially expected.
Some notable products and services are seeing price declines, including airfares, which fell 8.1% in a month, or about 19% less than last year. Gas prices are starting to slowly decline, and used cars saw their prices drop 0.5% from May, the report said. The New York Times‘ report.
The CPI rose 3% in the year to June, better than the 4% increase seen in the last CPI report in May. This was the smallest increase since March 2021, according to the Bureau’s data. In addition, the CPI for all items, excluding food and energy, rose 0.2% in June, the smallest increase since August 2021, according to the Bureau.
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According to the PPI, which measures inflation before it reaches consumers, final demand rose just 0.1% in June, seasonally adjusted, the bureau said. That was the smallest year-on-year increase since August 2020, according to Reuters.
“The economy is still quite strong,” said Dr. Peter Rupert, professor of economics at the University of California, Santa Barbara, speaking at the Gold 100 and Fastest 50 Awards & Summit hosted by Trade Show Executive. “The labor market is as strong as ever. The CPI and PPI show that the Fed’s policy seems to be working, with inflation falling. There is nothing in the data right now that suggests a slowdown. The Fed is on track for another 25 basis points of rate hike, but markets have already priced that in.”
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Contact Peter Rupert at peter.rupert@ucsb.edu