INDIANA — A sign of hope in the fight against inflation pricing falling for the first time since early in the pandemic.
On Thursday morning, the Bureau of Labor Statistics latest consumer index reported a 0.1% drop in consumer prices from May to June for the first time since 2020.
Experts say falling gas prices and lower car prices led to an overall decline with the annual inflation rate, down from 3.3% to 3%.
Here’s what that means for you — you'll be spending less for things like gasoline, airfares and new and used cars.
“We're seeing prices come back down, which is much better than anybody would have expected a year ago,” said Michael Hicks, the director of the Center for Business and Economic Research at Ball State.
Despite improvement in overall inflation, you still may be paying more on rent, groceries, eating out and services like car insurance.
Experts report Americans are still spending $195 more for the same goods and services than they were a year ago — and $386 more versus two years ago.
But some people’s incomes on average are outpacing inflation, helping to absorb some of those higher costs.
Hicks still says this slight ease in inflation is significant, even if it sounds small, and it could also be good sign, especially for Hoosier home buyers.
"It’s reinforcing the strength of the long-time economy. The other thing that I think this will likely do for mortgage rates is bring them down faster than the Federal Reserve will reduce rates, because mortgage lenders now are looking down the road,” explained Hicks. “Rates are going to drop substantially over the next year or two."
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The latest ease beats what economists expected, but it’s still above the Federal Reserve’s target of 2%.
“Most economists and the Federal Reserve have predicted that the economy is going to continue to grow fairly strongly, better than expected growth. Through 2023, 2024 and the first half now of 2025, labor markets remain pretty good,” said Hicks.
More economists think the Fed will cut rates in September, which would make it cheaper to pay off things like credit card debt.
