by Alexander William Salter
The American Institute for Economic Research
The Federal Reserve is trying to engineer a gradual disinflation. It is getting outright deflation. The Bureau of Labor Statistics reported that the Consumer Price Index (CPI) decreased 0.1 percent in June. Consumer prices have grown 3.0 percent over the last year, which is the lowest 12-month rate since March 2021.
Core CPI, which excludes volatile food and energy prices, increased 0.1 percent. Year-over-year core inflation was 3.3 percent, the lowest since April 2021.
[…] Headline price decreases, driven by monetary tightening, are not necessary to get us back to the Fed’s target 2 percent growth path, but they do facilitate a quicker return. We may have reached a definitive point in policymakers’ (self-imposed) struggle against excessive dollar depreciation.