June marked the lowest rise in annual inflation in more than two years, but rates vary across the country.
Annual inflation tumbled to 3% last month, down a full percentage point from the month before, according to data released by the Bureau of Labor Statistics on Wednesday. The decline comes exactly a year after inflation, as gauged by the consumer price index, hit its peak of 9.1% in June 2022.
INFLATION DROPS TO 3% IN MAJOR BOOST FOR BIDEN AND BIDENOMICS
But in New England, annual inflation is running notably lower than 3%. Inflation in the Census Bureau’s New England region, which includes Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut, has risen a mere 1.8% since last year.
The middle of the country has also experienced cooler inflation than the national average. In the Midwest, annual CPI inflation was running between 2.3% and 2.5% last month. In the four-state region of Texas, Louisiana, Oklahoma, and Arkansas, inflation was clocking in at 2.2%.
But in other Southern states, from West Virginia and Maryland down to Florida, inflation was running above the national level, ranging from 3.3% to 3.8%.
That 3.8% level was gauged in the South Atlantic region, which includes Florida, Georgia, South Carolina, North Carolina, Virginia, West Virginia, Delaware, and Maryland and represents the hottest region for inflation in the country.
Out West, annual inflation came in at between 3.4% and 3.7% in June, with the highest inflation being felt roughly in the country’s Mountain time zone, with inflation on the coast being slightly lower.
The CPI report also includes some even more localized inflation readings. In South Florida, which includes the Miami, Fort Lauderdale, and West Palm Beach areas, annual inflation is nearly 7% higher than a year ago. But in the Houston, Texas, area inflation has only risen 1.7% since June 2022.
The only area that has experienced deflation, which is when inflation falls below last year’s baseline, was urban Alaska, which experienced negative 3.3% inflation from last June.
Another interesting element that the June CPI report digs into is inflation for individual categories of purchases. Some goods are deflating, while others are still experiencing breakneck annual inflation.
Notably, energy prices have fallen precipitously since June 2022, when energy costs were soaring in part due to supply concerns stemming from the war in Ukraine. Gasoline was down by 26.5%, while utility gas service prices fell more than 18% over the past year.
But the price of other goods has kept inflating over the past year. Shelter costs, for instance, are up nearly 8%, vehicle insurance has risen about 17%, and food away from home, think restaurants, has increased by 7.7%.
The latest inflation report is good news not only for the economy, which has been buffeted by explosive inflation for the past couple of years, but also for President Joe Biden, who has been touting the bright spots of the economy, such as the strong labor market, as a result of “Bidenomics.”
The Federal Reserve has been jacking up interest rates since last March in order to squelch demand and drive down price growth, although it paused hiking rates last month for the first time since it began its tightening cycle. Still, Fed officials have indicated that they will raise rates once again during this month’s Federal Open Market Committee meeting.
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The Fed’s most recent projections, released last month, showed that FOMC participants expected two more rate hikes before the end of the year. Following Wednesday’s report, a majority of investors expect that next month’s expected rate hike will be the last.
Investors now assign about an 80% chance that the Fed will pause hiking again at its September meeting, according to CME Group’s FedWatch tool, which calculates the probability using futures contract prices for rates in the short-term market targeted by the Fed.