Kiplinger Inflation Outlook: Inflation Eases for a Second Time This Year

A Federal Reserve interest rate cut is still unlikely before November, but July can’t be ruled out yet.

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Inflation eased again in May. Overall inflation edged down to 3.3% as energy prices dipped, and stepped down to 3.4% when you exclude food and energy prices. Inflation in services, a Federal Reserve focus, slowed to 0.2% in May (and 5.3% over the past 12 months), helped by a small decline in the cost of motor vehicle insurance. Those prices had risen 20.3% over the past 12 months. May marked the first time in 29 months that they have not increased. Medical care inflation also eased because of a smaller rise in hospital costs. Airfares declined along with the drop in fuel costs. 

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David Payne
Staff Economist, The Kiplinger Letter

David is both staff economist and reporter for The Kiplinger Letter, overseeing Kiplinger forecasts for the U.S. and world economies. Previously, he was senior principal economist in the Center for Forecasting and Modeling at IHS/GlobalInsight, and an economist in the Chief Economist's Office of the U.S. Department of Commerce. David has co-written weekly reports on economic conditions since 1992, and has forecasted GDP and its components since 1995, beating the Blue Chip Indicators forecasts two-thirds of the time. David is a Certified Business Economist as recognized by the National Association for Business Economics. He has two master's degrees and is ABD in economics from the University of North Carolina at Chapel Hill.