EDITORS/NEWS DIRECTORS:
Inflation is steadily declining as food and gas prices fall from the peaks they reached last year. Yet price increases remain stubbornly high for used cars, rents, and a range of services such as restaurants, travel, and car insurance.
As a result, core inflation — which excludes the volatile food and energy categories — has persisted at a level far above the Federal Reserve's 2% target. Economists consider core inflation a better measure of underlying price trends. So despite some signs of improvement, inflation has not been conquered yet.
In an effort to combat rising prices, the Fed has lifted its key interest rate 10 times in the past 15 months. But now, Chair Jerome Powell and other top Fed officials have signaled they will likely forego another rate hike at its upcoming meeting on Wednesday. Yet they could resume increasing borrowing costs at its next meeting in July.
So far, the Fed's rapid rate increases have totaled about five percentage points and have made mortgages, auto loans, credit card borrowing and business loans more expensive. The Fed's goal is to slow spending and growth and cool inflation.
On Tuesday, the government reported that consumer prices rose 4% in May compared with a year ago, sharply below April's figure of 4.9%.
That would be down from a peak of 9.1% in June, the biggest increase in four decades.
Yet core prices remained high, rising 0.4% in May. Compared with a year ago, core prices rose 5.3%, down from the yearly increase of 5.5% in April.
Inflation first surged two years ago as the pandemic led Americans to pull back sharply on spending on travel, dining out, and entertainment. Instead, consumers, fueled by stimulus checks from the government, ramped up spending on standing desks, furniture, and exercise bikes, clogging supply chains and leading to sharply higher prices.
Making things worse, Russia's invasion of Ukraine last year sent food and gas prices soaring.
Since then, gas prices have come down from their peak last spring of about $5 a gallon nationwide, on average, to $3.59 Monday. Adjusted for seasonal patterns, gas prices fell 5.6% from April to May; they’re down nearly 20% from a year ago. And grocery prices ticked up just 0.1%, a relief to consumers, though they’re still 5.8% higher than they were a year ago.
Here are some ideas and resources you can use in reporting on inflation in your area:
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READ THE LATEST FROM AP
— US consumer price growth slowed last month, though underlying inflation measures stayed high
— Is it a ‘skip’ or a ‘pause’? Federal Reserve won’t likely raise rates next week but maybe next month
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CONSIDER THESE QUESTIONS
Despite the easing of prices for high-profile items such as food and gas, they remain far higher than they were before the pandemic and are still squeezing many households' finances. Some questions you might want to ask people in your community:
— Are prices hikes running ahead of increases in your pay?
— How are you coping? Are you saving less? Buying fewer things? Substituting cheaper items? Get specific examples — i.e. are people buying store-brand ketchup instead of Heinz? — and how they feel about it.
— Do they expect inflation to last? This is an important question for policymakers and economists because “inflation expectations’’ can be self-fulfilling. If consumers think prices will be higher tomorrow, they tend to buy today — and that demand adds to inflationary pressure. They are also more likely to demand higher pay, which can feed into inflation.
— Rent and home prices, a big part of the consumer price index, have risen sharply. Are they having an impact on you? Are you living in a smaller apartment than you’d like? Or not in your preferred neighborhood? Have you put off a home purchase or dropped plans to buy because of high prices?
— Who do you blame, if anyone, for higher inflation? What should be done?
— Do you feel that businesses are taking advantage of the situation to gouge consumers? If so, are the biggest offenders big companies, or are local businesses taking advantage, too?
— Do you remember the last time inflation was running hot — back in the 1970s and early 1980s? How does this experience compare?
— State universities often have research centers or individual economists who analyze the state or local economy. It’s worth looking for experts to interview about the local impact of higher prices.
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VIEW INFLATION RATES NEAR YOU
Inflation is a nationwide and global issue. But you can get localized data from the U.S. Bureau of Labor Statistics if you want to check whether your community is somehow an outlier:
— At this site you can get a table showing year-over-year inflation in a limited number of metro areas going back 20 years: https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-metro-area.htm. You will get a chart. Click “Show table’’ to get the raw numbers.
— For more detailed information, go here: https://www.bls.gov/data/home.htm.
Under “Inflation & Prices,’’ hit the green “One Screen’’ link for “All Urban Consumers (Current Series).’’
Up will come the “One Screen Data Search Page.’’
The first option, window No. 1, allows you to select “U.S. city average″ to get nationwide data or choose a specific region or metro area.
Next, in window/option No. 2, you can choose “all items’’ to get the Consumer Price Index for whatever region/metro you choose. You can also run down the menu to look for specific items such as fruits and vegetables and used cars and trucks. Click “Get Data.’’
A seemingly incomprehensible table will pop up, showing you 10 years of the Consumer Price Index for the geographic area and/or specific items you chose going back 10 years.
Don’t despair. Toward the top of the page you’ll see a “More Formatting Options’’ link. Hit that.
Next you will get options to finetune your search. You will probably want to unclick “Original Data Value’’ (to get rid of the meaningless index figures) and click “12-month percent change’’ to see how much prices have risen over the past year and how annual inflation has been changing over time. Hit “Retrieve Data.″
The “More Formatting Options’’ link also allows you to go back farther in time to compare today’s inflation to past inflation.
