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By Staff Reporters
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DEFINITION: A consumer price index (CPI) is a price index, the price of a weighted average market basket of consumer goods and services purchased by households. Changes in measured CPI track changes in prices over time.
CITE: https://www.r2library.com/Resource
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4 Key Points from the Report
1. Energy is doing a lot of the work. Cheaper energy played a major role in pulling inflation down to 4% last month from 4.9% in April, per Axios. Gas prices plunged almost 20% from last year, when Russia’s invasion of Ukraine sent fuel costs to the moon, while broader energy prices fell nearly 12%.
2. “Revenge spending” is down. Once COVID pandemic lock downs lifted, Americans splurged on vacations, leisure, and recreation (new pickle ball paddles!) in what economists dubbed “revenge spending.” Now that everyone has taken their week long trip to Italy, there are signs that revenge spending is waning: Airfare prices dropped 13% annually in May and, according to the US Travel Association, hotel demand is below 2019 levels. Bad for your Instagram, but good for inflation.
3. Food prices are up. The cost of food ticked up 0.2% in May from April after staying flat in the previous two months, showing how inflation has persisted on grocery store shelves. But not all aisles are created equal—the price of eggs dropped nearly 14% from April (the biggest one-month drop since 1951), while fruit and veggie prices rose 1.3%.
4. More than anything else, rent is propping up inflation. Shelter costs are the largest category in the CPI report, and they’re still on the upward march, climbing 8.7% from a year earlier. The good news: Economists say this government data doesn’t reflect on-the-ground information, such as reports of softening rent by Zillow and Apartment List. Shelter costs in the CPI are expected to decline during the second half of the year.
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Filed under: "Ask-an-Advisor", Breaking News, Financial Planning, Funding Basics, Health Economics, Investing, LifeStyle | Tagged: Consumer Price Index, CPI, energy, energy prices, FDIC, fed, Federal Reserve, food prices, rent, revenge spending, travel, Zillow |
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