"Supply chains have normalized," says White House economist Ernie Tedeschi. Egg prices have fallen too, as flocks of laying hens rebound from a severe outbreak of avian flu. Just as one source of pocketbook pain is resolved, another pops up to take its place.Įnergy prices that spiked after Russia's invasion of Ukraine have come back to earth. The challenge for consumers - and the central bank - is that inflation has been a moving target. "Five percent inflation is better than 9%, but it's still a long ways away from their 2% target." "We believe the Fed has more work to do," Patterson said. But additional rate hikes could follow if inflation remains stubbornly high. Investors are betting that the Fed will leave interest rates unchanged at this week's meeting. The central bank has already raised interest rates 10 times in the last 15 months in an effort to tamp down demand and bring prices under control. The latest inflation news comes as the Federal Reserve begins a two-day policy meeting. "Leisure and hospitality, cost of travel, that's remained concerningly sticky," said Andrew Patterson, a senior economist at Vanguard. But while the price of many goods has leveled off or even fallen, the cost of services such as restaurant meals and car repair continues to climb. Annual inflation has dropped significantly since last summer, when it hit a four-decade high of 9.1%. Rising rents and used car prices were partially offset by cheaper gasoline and electricity.Įxcluding volatile food and energy prices, "core" inflation was 5.3% for the 12 months ending in May. Prices rose 0.1% between April and May, a smaller increase than the month before. That was the smallest annual increase since March of 2021. But the overall cost of living is still climbing uncomfortably fast.Ĭonsumer prices in May were up 4% from a year ago, according to a report from the Labor Department Tuesday.
The falling price of gasoline and eggs took some of the sting out of inflation last month.
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