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Inflation may come down soon, but not enough


Friday’s inflation headlines sound scary. When it comes to some of the things they buy, Americans are probably about to see substantial relief. Still, that alone won’t be enough to convince the Federal Reserve that it can mitigate the magnitude of rate hikes by the fall.

The Labor Department said Friday that consumer prices rose 1% last month from April, putting them 8.6% above their level a year earlier for the largest gain in 40 years. Much of this had to do with the substantial increase in gasoline prices; prices excluding food and energy products – the so-called core that economists use to try to discern the trend of inflation – rose a smaller 0.6%. This sent core prices up 6% from a year earlier, which is a little more modest than the gains seen in the previous three months, although still uncomfortably high.


Wj

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