June 12, 2024
It’s certainly not enough – but inflation is cooling.
Wait! Before you start firing off comments like…’where” or not where I live or the government is making this up…just take a breath and wait so you understand what these numbers mean.
According to the latest consumer price index report released this morning — inflation between April and May of 2024 was 0.0%. That means it did not change – it stayed the same between April and May of this year. We haven’t seen flat inflation month over month in like two years. This is the direction the Fed wants to see. Now – when you look at inflation on everything – not excluding anything – year over year – inflation was up 3.3% between May of 2024 and May of 2023. Now *that* is still well above the Fed’s target rate of 2%. So – year over year – not in the right direction. What’s keeping inflation so high? I’ll give you a hint… it’s something we all have to deal with every single day.
Before I get into all those details – let me explain what these numbers mean – just because inflation numbers are cooling does not necessarily mean prices are going down. It just means the rate in which prices increase is slowing down. Generally if we see prices dropping – that’s not a good indicator for the economy and it could signal trouble ahead. And for those of you who say these numbers are made up by the government first – they’re not – but also even if you believe that fine. But you need to understand this report because it’s one of the big ones the fed uses to determine when to cut or raise your interest rates..
Ok – now that we’ve got that out of the way – let’s talk about that big elephant in the room. What’s keeping inflation from dropping? Well it’s several things but one of the biggest is shelter. It’s up for the fifth straight month. And now sits at 5.4% higher than May of 2023.
Food at the grocery store is remaining flat between (0.0%) April and May of this year and increased only 1% between May of 2024 and May of 2023. The index for dairy and related products 0.5% in May, led by a 1.3% decline in the index for milk month over month. The index for fruits and vegetables were unchanged in May. And meats, poultry, fish, and eggs increased slightly – by 0.2% in May. And yes – for those of you wondering coffee was in there. It was down 2.5% year over year and down 0.6% month over month.
Gasoline was down 3.6% between April and May of this year – but it was up 2.2% year over year.
It’s also worth noting that motor vehicle insurance was up 20.3% year over year and medical care was up 3.1% year over year. The index for used cars and trucks was down 9.3% year over year.
