According to the U.S. Bureau of Labor Statistics, inflation reached the lowest level in two years during the month of May. Despite this being the case, there are still certain consumer goods that remain expensive in today’s economy. Economists forecasted that the inflation rate would be at 4.1% at the end of May, so the numbers are actually slightly better than anticipated at 4%. Furthermore, this is a massive improvement when compared to the month of April, as the inflation rate was at 4.9% during that month. These gradual decreases in inflation rates are finally starting to translate to consumer spending, as the prices of some goods are remaining the same or even becoming less expensive.
Price Growth Halted
Something that is certainly worth noting is that the price growth for certain industries has come to a halt. The prices of air travel and medical services have shown little to no growth since the month of April. These two industries are very important in the eyes of the Federal Reserve because the air travel and medical services categories were increasing in price for quite some time up until May. Declines in price growth were seen across almost the entire board. However, we are still seeing prices rise for things that are considered necessities.
Food & Groceries
Despite declines being seen in almost every category, the price of food has been continuing to increase steadily. The growth of food prices has increased by 6.7% in the past year. The price is cost to eat at home increased by 5.8%, and the cost of dining out saw an 8% increase. Buying groceries has also been a burden on the wallet of many U.S. consumers. The prices of ordering groceries online have increased by 8.5 %, according to the data provided by the U.S. Labor Department.
Wrap Up
Although inflation is still going down, the Federal Reserve is still locked in on achieving its goal of reaching an inflation rate of 2%. After 10 consecutive interest rate hikes since March of last year, we will keep everyone updated on what the Fed’s most recent policy will pertain.