For the third straight month, inflation has cooled. Many economists think this most recent report was better than expected and may mean that interest rate cuts from the Federal Reserve could be coming soon. 

What You Need To Know

  • Numbers from the Bureau of Labor Statistics show inflation slowed again for the month of June

  • Consumer prices fell for the first time since the early part of the pandemic 

  • Still though, the costs of food, rent, health care and other necessities remain much higher than they were before the pandemic

Consumer prices declined 0.1% from May to June after remaining flat the previous month. This is the first time U.S. consumer prices have fallen in four years.

But when comparing prices last month to those a year ago, prices are still up 3% in June. However, that is still less than what we saw in May when inflation was 3.3%.

Still though, the costs of food, rent, health care and other necessities remain much higher than they were before the pandemic.

“So the good thing about seeing this lower inflation number is that we're on the right path,” said Jonathan Ernest, a professor of economics at Case Western Reserve University. “The Federal Reserve's taking this is as a good indication that they should maybe act to start to lower interest rates, to, promote more growth, which means you might be able to borrow money to buy a house, buy a car, etc., at a lower rate. But it also means that businesses can expect that more of you will be coming out and shopping for those things, so hopefully they hire more people to produce all that fun stuff.”

Ernest said the Fed’s target rate is 2% so the economy is on the right path, but inflation would need to continue to drop through the summer for the Federal Reserve to begin making interest rate cuts hopefully by September.