In the United States the inflation fell to its lowest rate in two years in June, according to a report from the Labor Department. The Consumer Price Index (CPI), an indicator key to the U.S. Federal Reserve’s (Fed) policy actions, rose 3% from the same month last year. That’s a welcome sign to policy makers who have waged a battle against the rising costs of goods and services across the country.
The decline in inflation is largely due to the Fed’s campaign to raise interest rates over the past year in order to slow demand and keep a lid on prices. There have been mixed signals from Fed officials as to whether even more rate increases will be necessary to bring inflation back to its 2% target rate. However, the June CPI report suggests it may not be necessary.
Core CPI, which excludes the often-volatile food and energy categories, reveal even better news. The June core CPI report marked the lowest annual rate since 2021. Airfare and used car prices showed particularly large declines.
The news is also welcome to struggling households, many of which have seen wages remain stagnant as prices climb. Although inflation in many areas, such as housing, continues to be a burden, the overall news of declining costs will be welcome to many consumers.
The US is not alone in its inflation woes. Despite a decrease in Colombia’s inflation rate to 12.13% in June, food prices remain the highest contributor to overall prices and have continued to rise over the past two years. Given the US current inflation rate, however, any efforts to further curb inflation may be unnecessary. Americans can now take comfort in the news the rate of inflation has eased to a more manageable rate, bringing some much needed relief.