After shooting up during pandemic, inflation is inching closer to normal levels
MIAMI - A new government report shows inflation is finally getting closer to historically normal levels
Efforts by the Federal Reserve over the past 16 months to slow the economy and weaken inflation by boosting interest rates, appear to be working.
A new report from the Bureau of Labor Statistics shows overall inflation in June rose 3 percent compared to the previous year. That is the lowest level in more than two years and down from the peak of 9.1 percent we saw in June of 2022.
PRICES EASING
Lower gas prices are a major reason for the dip. A gallon of regular unleaded is down more than a dollar in the past year according to AAA. Prices at the grocery store are up compared to last year but did manage to tick down between May and June. Bacon fell 10.1 percent in the past year and eggs dropped 7.9 percent.
"It looks like the inflation rate should continue to come down. How fast, we don't know. But we are looking to see that inflation rates come down to closer to 2 percent, that's where it was before the pandemic began," says CBS News Business Analyst Jill Schlesinger.
HOW DID WE GET HERE?
The pandemic sent the economy into a frenzy. A global supply chain crisis was coupled with a huge boost in spending after Americans were given trillions of dollars in federal aid. What followed was skyrocketing inflation.
The Federal Reserve has been boosting interest rates for more than a year to cool down inflation. Last month the Fed hit pause on another rate hike, but economists believe the board will be looking for an increase at its meeting later this month,
"It is likely that we see the Fed go up by a quarter of a percentage point, we'd be at 5.25 to 5.5 percent in the Federal funds rate. And, if so, that would be the highest level in 16 years," Schlesinger says.
Federal Reserve Chairman Jerome Powell has said the Fed will continue to raise raise as needed, until inflation gets down the target range of 2 percent.
