US Underlying Inflation Hits Lowest Level in Years

Underlying inflation in the US has been declining to levels not seen in years. According to the International Business Times, several key price measures have shown significant progress toward the Federal Reserve's long-term target of 2% inflation.

The Dallas Federal Reserve's trimmed mean measure showed one-month annualized inflation slowing to 1.4% in June, down sharply from 2.7% in May and marking its lowest reading since November 2020. On a 12-month basis, the measure eased to 2.2%, its lowest level since July 2021.

Despite this progress, Federal Reserve officials have cautioned against placing too much weight on any single indicator. Dallas Fed President Lorie Logan warned that recent changes in the composition of price movements may be causing the index to understate the true pace of inflation.

The latest figures were released alongside the Commerce Department's June Personal Consumption Expenditures Price Index, the Fed's preferred inflation gauge. The all-items PCE index declined 0.1% during the month, helped by lower fuel prices, while core PCE, which excludes food and energy, rose a modest 0.1%. Compared with a year earlier, headline PCE increased 3.7%, while core inflation stood at 3.3%.