WASHINGTON (AP) — Signs that inflation pressures in the United States are steadily easing emerged Friday in reports that consumer prices rose in June at their slowest pace in more than two years and that wage growth cooled last quarter.
Together, the figures provided the latest signs that the Federal Reserve’s drive to tame inflation may succeed without triggering a recession, an outcome known as a “soft landing.”
A price gauge closely monitored by the Fed rose just 3% in June from a year earlier. That was down from a 3.8% annual increase in May, though still above the Fed’s 2% inflation target. On a monthly basis, prices rose 0.2% from May to June, up slightly from 0.1% the previous month.
Last month’s sharp slowdown in year-over-year inflation largely reflected falling gas prices, as well as milder increases in grocery costs. With supply chains having largely healed from post-pandemic disruptions, the costs of new and used cars, furniture and appliances also fell in June.
The cost of some services, though, continued to surge. Average prices of movie tickets rose 0.5% from May to June, and are up 6.2% from a year earlier. Veterinary services, up 0.5% last month, are 10.5% higher than a year ago. And restaurant meal prices increased 0.4% in June; they’re up 7.1% from 12 months earlier.
A measure of “core” prices, which excludes volatile food and energy costs, did remain elevated even though it also eased last month. Economists track core prices because they are considered a better signal of where inflation is headed. Those still-high underlying inflation pressures are a key reason why the Fed raised its short-term interest rate Wednesday to a 22-year high.
Core prices were still 4.1% higher than they were a year ago, well above the Fed’s target, though down from 4.6% in May. From May to June, core inflation was just 0.2%, down from 0.3% the previous month, an encouraging sign.
A separate report Friday from the Labor Department showed that a gauge of…
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