Lower Used Car Prices and Energy Prices Helped Bring Inflation Down to 3.0% in June

Mark Hake

The Dept. of Labor reported today, June 12, that its Consumer Price Index (CPI) number for the last 12 months ending June fell to just 3.0%. This was before seasonal adjustment, but it shows inflation is on the decline.

For example, last month the figure was 4.0% for the prior 12 months ending May 30. And in April the figure was 4.90%.

So, inflation is definitely decelerating. In fact, six months ago, the prior 12 months' inflation for Jan. 2023 was 6.4%.

So, in 6 months, inflation is off over 50%. Falling from 6.4% to 3.0% means it is down 53% over the last 6 months (i.e., 3.4%/6.4%).

Why is this happening?

Lower Used Car and Energy Prices

The biggest contributors to this decline are lower used car, utility, and energy prices. For example, for the 12 months ending June 2023, used car prices are now negative 5.2%.

CPI over the last 12 months ending June 2023Photo byDept. of Labor

You can see this in the table above provided by the Dept. of Labor.

That doesn't mean that used car prices are rising more slowly. It means that dealers have been cutting their prices on average.

And look at energy prices. They are down 16.7% on average for the past 12 months. Most of that came from a 26.5% reduction in gasoline and an 18.6% cut in utility gas prices.

So, thanks to your local car dealer, utility, and gasoline dealer, inflation is now getting under control. C

But can this keep up?

That is highly dependent on external factors - OPEC, the war in Ukraine, the relative attractiveness of electric vs. ICE cars (internal combustion engine), and whether the supply and demand of oil and gas stay stable.


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Mark R. Hake, CFA, writes articles on national and local news, stocks, and market events at Kiplinger.com, Barchart.com, Medium.com, and Newsbreak.com as well as TalkMarkets.

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Mark Hake is a financial analyst, investor, and Chartered Financial Analyst (CFA). He writes about US and foreign stocks as well as cryptos, hedge funds, and private equity. He previously ran his own hedge fund, investment research firm, and acted as CFO for a fintech startup. He focuses on finding value, arbitrage, and hidden asset opportunities.

Phoenix, AZ

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