Inflation cooled again in June to the lowest rate in two years, but a spike in the cost of rent, gasoline and groceries kept prices abnormally high for millions of U.S. households.
The Labor Department said Wednesday the consumer price index, a broad measure of the price for everyday goods, including gasoline, groceries and rents, rose 0.2% in June from the previous month. Prices climbed 3% on an annual basis, slightly below the 3.1% increase forecast by Refinitiv economists.
Although inflation has cooled from a peak of 9.1%, it still remains above the Federal Reserve's 2% target rate.
"Prices for everything from eggs to used cars dropped in June, causing a big deflation in inflation," said Robert Frick, a corporate economist at the Navy Federal Credit Union. "By one measure, inflation is just one-third of what it was a year ago. However, this is not yet a turning point. Core inflation will prove tougher to beat."
INFLATION ROSE JUST 3% IN JUNE AS PRICE PRESSURES CONTINUE TO COOL
Here is a breakdown of where Americans are seeing prices rising and falling the fastest as they continue to wrestle with sticker shock.
Shelter costs, which account for about 40% of the core inflation increase, rose 0.4% for the month and are up 7.8% over the past year.
It was the largest contributor to the monthly increase, the Labor Department said in the report.
Rising rents are concerning because higher housing costs most directly and acutely affect household budgets. Another data point that measures how much homeowners would pay in equivalent rent if they had not bought their home also climbed 0.4% from the previous month.
HOUSING AFFORDABILITY PLUMMETS TO LOWEST LEVEL SINCE 2007 AS PRICES JUMP
However, experts have noted the Labor Department captures developments in shelter costs and market rents with a big lag. The latest data included in the June CPI report likely reflects the hot housing market in mid-2022.
"As we have often chronicled, rental rates tend to be reset over periods of years, and consequently there is a lag to these price reductions," said Rick Rieder, chief investment officer of Global Fixed Income at BlackRock. "But we anticipate that the cost of shelter is coming down."
Food has been one of the most visceral reminders of red-hot inflation for Americans. In June, the cost of groceries increased for the second straight month, reversing earlier declines.
Food prices climbed 0.1% over the course of the month, according to the data. On an annual basis, prices remain up 5.7% compared with the same time last year.
Consumers paid more for a number of items in June, with the price rising for bread (0.7%), breakfast cereal (1.1%), beef and veal (0.4%), chicken (0.6%), fish and seafood (0.8%), fresh fruits (1%) and fresh vegetables (0.7%).
There were some substantial declines in food prices last month. The cost of eggs, which surged earlier this year amid an outbreak of the avian flu, plunged 7.3% in June. The price of eggs is now down 7.9% when compared with the same time last year.
The price of pork, ham, cheese and coffee also posted notable declines.
Energy prices jumped again in June after declining in May, rising 0.6% over the course of the month. That included a 1% spike in gasoline.
However, gas prices are down 26.5% compared with the same time last year, when the average cost for a gallon of regular was running around $4.65.
There was some good news for Americans looking to buy a car in June.
Used car and truck prices, which have been a major component of the inflation increase, fell 0.5% over the month and are down 5.2% compared with the same time one year ago.
The cost of new cars and trucks was unchanged last month. From the previous year, new vehicle prices are up 4.1%.
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Airline fares fell again in June, with prices dropping 8.1% from May. Tickets are down about 18.9% compared with last year, according to the data.
