The Consumer Price Index (CPI) is expected to show a moderate increase in June, which would be encouraging news for Federal Reserve officials monitoring inflation levels. Economists predict that overall inflation in June will be around 3.1 percent on an annual basis, a slight decrease from May’s 3.3 percent and the lowest since January.
When excluding volatile food and fuel prices to gauge the underlying trend, the core CPI is projected to have risen by 3.4 percent compared to the previous year, consistent with the previous report. Monthly core inflation is forecasted to be at 0.2 percent, in line with the May figures.
Fed officials have been closely observing inflation trends to determine the timing of potential interest rate adjustments. Despite initial plans for multiple rate cuts in 2024, persistent inflationary pressures earlier in the year led to a pause in rate reductions. The current expectation is for one or two rate cuts by the end of the year.
However, recent data suggests that inflationary pressures are easing once again. The anticipated CPI reading is notably lower than the peak of 9.1 percent observed in 2022, indicating a return to a more moderate inflation environment.
