The consumer price index, which indicates the U.S. inflation rate, dropped to 3% in June, falling from 4% a month earlier, according to data released Wednesday by the Bureau of Labor Statistics.
According to the BLS, the overall price of goods increased by 0.2% from May to June as the price of goods and services has seen more modest price gains compared to the year prior. The consumer price index peaked in June 2022 at 9.2%.
At 3%, the inflation rate is the lowest it has been since March 2021.
The consumer price index weighs the costs of goods based on their importance. Items like food, shelter and energy tend to be weighted more heavily.
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The Federal Reserve has stated its goal is to get the annual rate of inflation to 3%. In hopes of dropping inflation, the Federal Reserve has placed interest rates at their highest levels in 15 years.
The biggest reason inflation dropped was energy costs have declined for American consumers over the last year. Gasoline costs fell 26.5% from the record high costs of a year ago. Natural gas is about 18% cheaper than a year ago.
Food costs continue to remain elevated. The cost of food intended to be consumed at home costs 4.7% more than a year ago, while food consumed at restaurants is up 7.7%.
Falling inflation hasn't come at a cost to workers, either. According to federal data, wages went up 4.4% over the last year. After late 2021 and early 2022, the data shows Americans are regaining some of the buying power they lost in the prior year.
President Joe Biden reacted positively to the release of the data.
"Good jobs and lower costs: That’s Bidenomics in action. Today’s report brings new and encouraging evidence that inflation is falling while our economy remains strong," President Biden said on Wednesday. "Our progress creating jobs while lowering costs for families is no accident, and I will continue to fight for lower costs for families every day. I ran for office to grow the economy from the middle out and bottom up, not the top down: that’s exactly what we’re doing."
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