US Inflation Dropped to 3% in June

Facts

• According to the Bureau of Labor Statistics' monthly report, released Wednesday, US annual inflation slowed to 3% in June despite the Federal Reserve pausing rate hikes after ten consecutive increases.¹
• Inflation rose to 9.1% in June 2022, the fastest annual rate since November 1981, but last month the Consumer Price Index (CPI) decreased for 12 consecutive months and reached its lowest rate since March 2021.²
• June's month-over-month increase of 0.2% and year-over-year drop to 3% beat economist forecasts of 0.3% and 3.1% increase, respectively.³
• While overall inflation had cooled, core inflation — which excludes food and energy costs — has risen 4.8% since last year, remaining well above the Fed's inflation target. Additionally, food costs are up 5.7% compared to June 2022.⁴
• The Fed is expected to increase the benchmark rate by 0.25% when it meets on July 24 and 25, as inflation remains above its 2% target. Interest rates, which were near zero in March 2022, currently range between 5% and 5.25%.⁵
• Meanwhile, GDP increased at an annualized rate of 1.1% for the three-month period ending in March, well below the 2% estimate.⁶

Sources: ¹ABC News, ²CNN, ³Yahoo Finance, ⁴FOX News, ⁵CNBC (a), and ⁶CNBC (b).

Narratives

• Democratic narrative, as provided by Yahoo Finance. Pres. Biden's economic plan is working and the US economy is well on its way to tackling inflation in a way his Republican rivals could never manage. The GOP has tried to exploit the global inflation crisis to score cheap political points against the Biden administration, but their flimsy arguments are becoming weaker as inflation cools. Despite being dealt a poor economic hand, the White House is enforcing an effective strategy to address the current issues.
• Republican narrative, as provided by The Heritage Foundation. It is curious that Pres. Biden is so obstinately standing by his failed economic agenda. The so-called "Bidenomics" plan has been an abject failure since he took office and Americans know it. The president is acting as if marginal improvements upon terrible statistics constitute a success, but the fact remains that inflation is still far too high, and the American people are the ones suffering.

Predictions