Consumer prices cooled off to the lowest level since March 2021, the Bureau of Labor Statistics reported Tuesday.
Prices rose 4% while price growth climbed just 0.1% month-over-month. The reading was lower than the 4.9% rate in April. Monthly, the forecast was for a 0.1% increase, lower than April’s 0.4% reading.
U.S. gross domestic product grew by a 1.1% annualized rate over three months ending in March, according to government data.
A jobs report earlier in the month saw a growth of 339,000 jobs in May compared to Wall Street estimates of just 195,000.
“Today’s report is good news for hard-working families. It shows continued progress tackling inflation at the same time that unemployment remains at historic lows,” President Joe Biden said in a statement Tuesday. “Annual inflation is now at the lowest level since March 2021, and less than half of what it was last June.”
One year after inflation peaked at a 40-year high of more than 9%, analysts are now looking at how fast it will fall.
The news comes as Fed Chair Jerome Powell will announce its latest rate decision as it determines how to accelerate or slow down the aggressive interest rate hikes that were used to slow inflation.
“[The] magnitude of [service] price increase has failed to slow enough to be comfortable that inflation is firmly on a path to 2%,” Joe Davis, chief global economist at Vanguard, and Andrew Patterson, a senior international economist at Vanguard, said in a statement. They pointed to ongoing increases in wages as one reason this measure has proven sticky.”
Economists expect the central bank will pause its rate hikes as it awaits further effects from its previous hike.