Inflation down but not out; gas prices expected to stay lower for summer
INDIANAPOLIS -- The nation's measure of inflation in May was about as low as it can get.
According to the Consumer Price Index, the overall prices of goods and services rose just 0.1% last month.
Inflation measured from May 2022 to May 2023 was 4%. That's not bad, but it's not great, and well short of the Federal Reserve's target of 2% annual inflation.
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Topping the things increasing in price according to the CPI was used cars and truck. They rose in price last month by 4.4%, matching a 4.4% in April. Also more costly in May: transportation services and shelter.
The runaway leader in reduced prices was the energy sector of the economy. Fuel Oil prices dropped 7.7% in May. Utility gas service was lower by 3.6%. Gasoline was 5.6% lower.
The good news for those with summertime travel plans, gas will definitely be cheaper.
According to GasBuddy.com, a year ago price at the pump in Indianapolis averaged $5.21 a gallon. Today, it's $3.61.
"It's going to be overall a much more affordable summer," said Patrick De Haan, the gas price guru at Gas Buddy. "There will still be increases and decrease here and there, but instead of prices starting with a five we're talking about prices this Summer starting with a three."
If there is a reason for consumers to remain concerned about inflation, Tom Essaye of Sevens Report Research said it's the consistently strong spending by consumers.
"People don't really restrain their spending until they're nervous about losing their job, and not being able to find another one," Essaye said.
But in Indiana and around the nation, unemployment remains low. So, lots of people are working, getting paid, spending that paycheck and helping fuel inflation.
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With inflation uncorralled by 10 consecutive monthly increases in interest rates by the Federal Reserve, what's a good plan for consumers for the remainder of 2023?
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What policy measures are being taken by the Federal Reserve to mitigate rising inflation?
Andy Mattingly, COO of Forum Credit Union, suggests people proceed with caution and a plan.
"You still want to stick to that idea people don't like, which is a budget and try not to spend more than you can make," Mattingly said. "This is not the time that I would add debt."