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Is the inflation fever breaking? Price increases in everyday expenses have finally subsided.
Americans beset by rising prices got another sign Wednesday that inflation is finally cooling.
The Consumer Price Index (CPI), a broad measure of the price of everyday goods including groceries, gasoline and rent, was flat compared to the previous month. Consumer prices were 3.3% higher compared to the previous year – lower than April data and lower than economists’ estimates.
Here’s what the latest inflation numbers from the Bureau of Labor Statistics mean for your household budget:
Shelter costs remain high, but renters are worse off
Few Americans have felt the effects of inflation more than the nation’s renters, but some relief may be on the horizon.
While rental prices remain high, they have been worse. The measure for shelter costs slowed to 5.4% on an annual basis, a slowdown from April and a sharp decline from the March 2023 peak of 8.2%.
A silver lining: rising vacancy rates, which could further slow rent increases.
Auto Insurance Continues to Rise as Gas Prices Rise
Car insurance costs haven’t been this bad for 47 years. The price of car insurance has risen 20.3% since last May, a problem felt across the country. However, the monthly index fell 0.3%, the first glimmer of hope for a slowdown in costs.
Three consecutive years of underwriting losses mean that insurers paid out more in claims and expenses than they received through the premiums we paid – leading to the sharp increases felt today.
Owning a car has generally become more expensive. Motor vehicle maintenance and repair costs increased by 7.2% year over year.
However, parking and toll rates were 7.2% higher than in March 2023.
But there was good news at the gas pump.
The gasoline index fell 3.6% in May on a monthly basis, compared to a 2.8% increase in April. As of June 12, the national average for gasoline was $3.45 per gallon, down from $3.62 the previous month, according to AAA data.
Anyone in the market to buy a used car or truck got a little break. Used vehicles recorded an annual decline of 9.3%, continuing to decline from pandemic-era highs. New car price inflation fell 0.8% compared to April 2023.
See more information: Tips for Getting Cheap Car Insurance in 2024
The prices of some foods cool down in the supermarket aisle
Increases in food prices – at least some of them – are making it easier.
Some items that saw the biggest slowdowns were ham, cheese, fresh seafood and apples.
But some foods remain stubbornly high. Juices and frozen drinks jumped 19.5% year after year, and beef products continue to get more expensive. Ground beef was up 4.9% from the previous year, steaks were up 5.7% and roasts were up 6%. According to data from the Federal Reserve Bank of St. Louis, this translated into an average of $7.47 per pound for raw roast beef.
Although food prices in general are experiencing less volatility, consumers are still feeling the impact of inflation. The cost of eating out increased by 0.4% compared to March and 4% compared to the previous year.
Restaurant meals were up 3.5% year-over-year, and even vending machine snacks were up 5.7%.
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Elder care and other healthcare costs are rising
Home health care for elderly or disabled family members saw a big jump, increasing 11.1% from the previous year, the BLS found.
Hospital and related services were 7.3% higher than a year ago. Inpatient hospital services increased 6.5% year over year and outpatient services increased 7.9%.
Meanwhile, prescription drug costs grew 2.4%, but over-the-counter drugs rose nearly 6% annually.
What is the next
Although inflation has fallen substantially since its peak of 9.1% in June 2022, the measure remains above the Federal Reserve 2% Target.
However, two consecutive months of reduced pressure on prices suggest that inflation may be on the consistent downward trajectory that policymakers have been seeking. Investors now anticipate just a quarter point rate cut this year, down from the six cuts expected at the beginning of the year.
Gabriella Cruz Martinez is a personal finance and housing reporter at Yahoo Finance. Follow her on X @__gabriellacruz.