The months-long debate over US inflation risk could come to an end in just a few weeks.
As the US economy reopened and spending boomed through the spring, economists set their sights on popular gauges of inflation. The Biden administration and the Federal Reserve eased fears around a surge in price growth, saying the pick-up would likely fade as bottlenecks get addressed and Americans settle into a new normal. Other experts and GOP lawmakers raised concerns that accelerating inflation would persist, kicking off a new economic crisis.
Recent data amplified spring inflation fears. The Consumer Price Index rose 0.6% in May, beating the median estimate for a 0.4% jump. The measure also posted a 5% year-over-year gain, marking the strongest rate of broad inflation since 2008.
Yet some key items that powered the stronger-than-expected inflation print are cooling off in June, and look to be cooling off for the reasons cited by the White House and the Fed. The trends lend credence to claims that stronger inflation will be temporary and give way to a period of healthier price growth.
Here are the three cooling price points that suggest broad inflation is slowing in June.