Inflation Rate Drops to 3 Percent in June, Yet Prices Still Rising and Recession Still Possible

There’s welcome news on the economic front in the form of some financial relief. Inflation across America is at its lowest annual rate in more than two years, as of June, but there could be a ways to go.

Although prices are rising at a slower rate, they are still continuing to rise.

The latest report from the Bureau of Labor Statistics shows the inflation rate is slowing, with prices rising at a 3 percent rate, the slowest pace in 2 years.

That’s thanks, in part, to lower gas prices, airline fares, grocery costs, and even cheaper used cars.

The Consumer Price Index shows price increases easing a year after inflation rates spiked to their highest level in 4 decades.

The inflation rate is down from a 4 percent annual rate in May.

Experts say that means wages are now finally rising faster than prices.

Although prices are rising more slowly, shoppers can still expect some sticker shock, compared to pre-pandemic levels.

Ted Rossman, Bankrate senior industry analyst, explained, “Prices are still rising for the most part, but they’re rising at a slower rate. That is still an obstacle for consumers. You know, you think about building off this ever higher base. I mean, that’s a really big deal for bigger ticket items like rent; shelter costs are actually driving about 70% of that monthly inflation increase. So that’s still a real trouble spot. “

Also, prices are still above the Federal Reserve’s 2 percent target. Economists are keeping their eyes on whether this trend continues through the summer.

E.J. Antoni of the Heritage Foundation weighed in on CBN’s “Faith Nation,”  saying, “Unfortunately, inflation is settling at 3 percent. It has been trending down, but if you look at the monthly increases over the last year, what you find is that 3 percent has essentially become the new baseline. In other words, there’s no sign that we’re going any lower from here on out. There’s no sign that we’re going to get to that 2 percent target of the Federal Reserve.    

And as far as a potential recession? Treasury Secretary Janet Yellen says it’s “not completely off the table.” That causes Antoni concern.

“I don’t think there’s a way out of this without a recession,” he cautioned. “You can’t spend, borrow and print trillions upon trillions of dollars and not expect any negative consequences. I’m not sure when we forgot that.”

Another question is whether the decline in the inflation rate will affect the Fed’s policy of hiking interest rates to bring down inflation. 

While economists say it appears those hikes are helping, they’re still putting the squeeze on Americans trying to pay down credit cards or buy a home or car.

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