Is inflation still cooling? Thursday’s report on June prices will provide clues

WASHINGTON (AP) — Optimism is rising among economists, investors and Federal Reserve officials that U.S. inflation is nearly under control, with the latest report on consumer prices expected to show another month of mild increases.

Consumer prices in the United States are believed to have edged up just 0.1% from May to June in data the government will release Thursday morning, according to a survey of economists by the data provider FactSet.

Inflation in June was likely held down by lower gas prices and a slight rise in grocery costs. The small increase would follow an unchanged reading the previous month. Measured from a year earlier, inflation for June is predicted to be 3.1%, down from 3.3% in May.

Chair Jerome Powell and his fellow Fed policymakers nevertheless still sound cautious. On Wednesday, Powell reiterated that there’s been “considerable progress” in slowing inflation to the central bank’s 2% target. At the same time, he cautioned that “more good data” would be needed for Fed officials to gain the confidence they need to cut their key interest rate, now at a two-decade high of 5.3%.

And even as overall inflation moderates, such necessities as groceries, rent and health care are much pricier than they were three years ago — a continuing source of public discontent and a potential threat to President Joe Biden’s re-election bid. Most other measures suggest that the economy is healthy, though slowing: Unemployment is still relatively low, hiring remains steady and many consumers continue to travel, eat out and spend on entertainment. Yet polls have shown that the cumulative price increases are weighing on Biden’s popularity.

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