Consumer price inflation just hit a new absolute high in June, showing the mixed bag that is the ongoing U.S. economic recovery. That’s precisely what the May Consumer Price Index reported, the most recent indication that consumer prices have risen sharply by 0.3% since then. Compared to September of 2022, prices are 2.7% higher. Even as inflation moves higher with the continued moderation of the labor market. All the while, the central bank has been going to extraordinary new lengths to underscore their own monetary policy initiatives.
Core goods prices bent up 0.2% on the month, a possible warning flag that the tariffs hammering U.S. imports are again beginning to exert upward pressure. One thing that has been extremely surprising about the core inflation rate, though, is its stability. It has risen 2.9% over the last year when excluding the volatile food and energy prices. Our measure of core inflation has been trapped at today’s levels since February. Of course, it’s important to keep in mind that this rate is still above the central bank’s long-term target of 2%.
Core services inflation posted a 0.25% month-over-month increase in June, adding significantly to the core CPI increase. Recent figures indicate that inflation remains sticky. If tariffs remain near their recently elevated levels, some of the scariest prospects for the inflation forecast appear much less probable.
The bank is in the process of intentionally pursuing an overall restrictive stance of monetary policy. It is intended to dampen inflationary pressures across the economy. Although the labor market is slowly starting to cool, the central bank is still committed to reaching its 2% inflation target. Core inflation fell to 2.9% at the end of 2025. This decline points to the long and difficult road that remains in the fight for sustainable price stability.
As greatly encouraged economic analysts look at this new development, they stress on being cautious with inflation trends. The interplay between core goods prices, services inflation, labor market dynamics, and monetary policy will play a crucial role in shaping the economic outlook moving forward.