Read the highlights of this week’s commentary from Helios:
- Inflation-weary consumers are finally experiencing some relief as the latest Consumer Price Index (CPI) data showed a welcome drop in prices for both necessities and discretionary items. The overall CPI remained unchanged in May, marking the tamest reading since mid-2022. In addition, the US Producer Price Index (PPI) recorded its most significant drop in seven months, with year-over-year producer prices rising 2.2%. This easing is attributed to smoother-functioning supply chains, a cooling jobs market, and stretched consumer budgets.
- In June, the University of Michigan’s consumer sentiment index dropped to a seven-month low of 65.6 from 69.1 the previous month, contrary to forecasts of a rise to 72. Inflation expectations for the next year remained stable at 3.3%, but long-term inflation expectations rose slightly to 3.1% from 3% in May. Both the current conditions index and expectations index declined from the previous month, reflecting concerns across income levels about tight budgets and high costs.
- Federal Reserve officials have revised their rate forecasts, now predicting just one rate cut in 2024 and four in 2025. Following the June Federal Open Market Committee (FOMC) meeting, Chair Powell stated that while there has been some favorable data on inflation, more consistent good data is necessary before considering rate cuts, even as inflation trends towards their 2% target.
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