Inflation Is Cooling But Not Fast Enough For The Fed
Date
6/13/2024 6:18:47 AM
(MENAFN- Asia Times)
It was a double whammy for economic data enthusiasts.
During the morning of June 12, 2024, the Bureau of labor Statistics published its latest inflation figures . The news was relatively good, showing that inflation rose 3.3% in the year to May 2024 – less than some analysts had expected .
A few hours later, the federal Reserve concluded its June meeting by holding interest rates steady – as forecasters expected – and releasing an updated set of economic projections .
What does it all mean? The Conversation US asked economist Christopher Decker to explain.
What are your major takeaways from the latest inflation report?
The May inflation rate – as measured by the Consumer Price Index for All Urban Consumers , or CPI-U – was down a bit from April, but not by much. Basically, this implies that not much changed on the inflation front, and it's been like this for a while now.
This isn't a bad thing, though. I like to take the long view: US inflation has really stabilized around 3.3%. In fact, we've been around 3% to 3.7% for 12 months now. So we have stable price growth – even if it's higher than the Fed's target rate of 2% – as well as wage and job growth . This economy is still quite strong.
In terms of the details, energy prices are down compared with last month – but energy prices tend to be volatile, so that might be a blip in the data, not a real trend. Labor markets are still tight. Average hourly earnings rose 4.1% this May compared to last year, indicating that employers need to pay higher wages to attract new workers and retain existing ones.
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