An inflation gauge that is closely tracked by the Fed falls to its lowest level in more than 2 years

abcnews.go.com:

A measure of consumer prices that is closely monitored by the Federal Reserve fell last month to its lowest level since March 2021, the latest sign that inflation in the United States is steadily cooling from its once-painful highs

WASHINGTON — A measure of consumer prices that is closely monitored by the Federal Reserve fell last month to its lowest level since March 2021, the latest sign that inflation in the United States is steadily cooling from its once-painful highs.

Prices rose just 3% in June from 12 months earlier, down from a 3.8% annual increase in May, though still above the Fed’s 2% inflation target. On a monthly basis, prices rose 0.2% from May to June, up slightly from 0.1% the previous month.

Last month's sharp slowdown in year-over-year inflation largely reflected falling gas prices, as well as milder increases in grocery costs.

Still, a measure of “core” prices, which excludes volatile food and energy costs, remained elevated even though it also eased last month. Those still-high underlying inflation pressures are a key reason why the Fed raised its short-term interest rate Wednesday to a 22-year high. The Fed’s policymakers consider core prices a better measure of where inflation might be headed.

Core prices were still 4.1% higher than they were a year ago, well above the Fed's target, though down from 4.6% in May. From May to June, core inflation was just 0.2%, down from 0.3% the previous month, an encouraging sign.

Friday's report from the Commerce Department also showed that Americans' willingness to keep spending, despite two years of high inflation and 11 Fed rate hikes over 17 months, remains a powerful driver of the economy. Consumer spending rose 0.5% from May to June, up from 0.2% the