America’s inflation report card was just released

If the Consumer Price Index, America’s most widely-used measure of inflation, was a balloon, it’d be filled with the normal kind of air and not helium. Because after rising for a while, it keeps floating down, down, down.

According to Labor Department figures released yesterday morning, inflation stood at 4.0% over the year-long period ending in May, down from 4.9% in April and 6% in February. It’s the index’s lowest annual figure in over two years – and about half of its peak of 9% last summer.

• The core index, a separate reading that excludes often-volatile food and energy prices, rose 5.3% in May compared with a year earlier. That’s above the 5.2% economists expected, but down from 5.5% the previous month.
• The core index remains higher than the overall index due to an earlier rise in rent prices (shelter costs collectively make up over one-third of the entire CPI) – but is also on its way down. Apartment-rent growth has cooled significantly since May, the WSJ reports, and this should be reflected in next month’s core inflation reading.

😬☝️ Zoom out: The Fed’s Open Market Committee, which has raised interest rates for 10 meetings in a row in a bid to tame inflation, ends its two-day meeting later today. The central bank is widely expected to not raise interest rates this time around – a move which officials are framing as a skip, not a pause, as they assess whether the bank’s policies are driving sufficient downward pressure on prices.