Gasoline prices plunged 12% from a year ago, and airfares are cheaper. The prices of new and used cars are barely moving. However, overall consumer price inflation rose to 2.4% due to high shelter costs. The significant shelter component, comprising more than one-third of the measure's weight, increased by 3.9%. If shelter inflation were to ease to 2% or even 3%, overall inflation would already be at a comfort point for the Federal Reserve.
The Fed will remain on pause until inflation is fully contained at or below 2%. It has cited uncertainty regarding the tariff impact to monitor how prices play out in the coming months. Wall Street bettors are pointing to September as the first of several potential rate cuts.
Meanwhile, car repair costs are soaring, indicating a labor shortage and the need to attract more young adults to the trade fields.
