Today’s release of the Consumer Price Inflation report indicated that, between May and June, the changes in the prices of all the goods and services that consumers typically buy averaged out to exactly zero. Energy prices fell in June, ofsetting slightly higher average prices in non-energy goods.
The 12-month inflation rate in core (i.e. excluding food and energy – see this post for why we care about that specific measure) consumer prices has now been flat or falling for the past 4 months, while the overall consumer price inflation measure is now showing the smallest 12-month increase in 9 months. Tomorrow we’ll get a new Producer Price Index report, which may well show the same thing. Month by month, I’m slowly becoming more convinced that the US’s inflation rate is on a distinct, if gradual, downward trajectory.