Weekly Market Commentary June 17th 2024

Inflation is lower – and so are some retail prices. 

There was a lot of good news last week about the cost of products and services in the United States. 

• First, inflation is slowing down. For the second month in a row, inflation slowed. Headline inflation was 3.3 percent year over year, lower than April’s 3.4 percent. 

In May, prices for gasoline and fuel oil, new cars, and clothing moved lower, while the cost of shelter, medical care, and eating out increased. Over the last 12 months, the price of used cars and trucks has dropped the most (-9.3 percent), while the cost of auto insurance has increased the most (+20.3 percent). 

• Second, wholesale prices dropped in May. “U.S. producer prices unexpectedly declined in May by the most in seven months, another welcome development that will strengthen the Federal Reserve’s confidence in moderating inflation. The producer price index for final demand decreased 0.2% from a month earlier, lower than all estimates in a Bloomberg survey of economists. Compared with a year ago, the PPI rose 2.2%...,” reported Matthew Boesler of Bloomberg. 

• Third, some companies are lowering prices. Over the past few years, a lot of companies boosted corporate profits by lifting prices. Now, as consumers pull back on spending, they’re reversing course. Abha Bhattarai of The Washington Post explained: