Inflation cools in June, local economist breaks down the newest numbers
Aug 14, 2024, 8:32 AM | Updated: 9:17 am
SALT LAKE CITY — The U.S. Labor of Statistics released its monthly report on Wednesday morning which showed inflation is cooling.
The Consumer Price Index dropped to 2.9% from 3% in June over a 12-month period marking the first time the index dropped beneath 3% since March 2021.
Robert Spendlove, a senior economist from Zion’s Bank joined Utah’s Morning News to break down the numbers. He said the numbers came in below expectations.
“So, the previous month it was 3% And for the last month came in at 2.9% So we’re coming down. Now remember that two years ago are inflation was about 9%. So, we’ve come a long way,” said Spendlove.
He said we still have a little way to go to get to the FED’s target of 2%, but said we are making good progress.
Inflation cooling, will rates drop?
“Jerome Powell has talked about this and he’s strongly indicated that the FED will start cutting rates in September. The big debate on Wall Street is whether the FED cuts by a quarter point or whether they go with the bigger cut and come in at maybe half a percent,” said Spendlove.
“I think this report would still lead to the FED being a little more cautious on how they come in. On the other side of the economy, we’re starting to see some deterioration in the labor market. The unemployment went up to 4.3%. So, the FED liked this report, but there’s still a little bit cautious about coming into strong.”
What about food costs?
Co-host Tim Huges noted that food costs are still up for consumers.
“That’s a really important point,” said Spendlove. “So what we’re talking about here is inflation, which is the change in prices. So, the increases are slowing down but overall prices are still a lot higher than they were four years ago.”
Spendlove explained that people are taking time to adjust to higher prices.
“It’s really difficult … food prices, housing prices, energy prices are all higher than they were a few years ago, and even within the inflation, we’ve still got some stickiness. So, housing prices are up about 5% over the last year and the service sector is up about 4.9%. So we’re still seeing some sectors that are seeing increases that are higher than we’d like to see.”
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