Inflation Falls as Lower Gas Prices Offer Relief for Workers

After the cost of living rose significantly in the past couple of months, the latest inflation report is offering evidence of a reprieve for workers: Inflation has eased in the past month following a decline in gas prices.

The consumer price index (CPI) decreased 0.4% on a seasonally adjusted basis in June and rose 3.5% year-over-year, the U.S. Bureau of Labor Statistics (BLS) reported July 14. That’s an improvement from May’s reading of 4.2% and the largest one-month decrease since April 2020, the BLS said.

Falling gas prices largely contributed to the decline in inflation. The index for energy fell 5.7% in June after rising 3.9% in May, 3.8% in April, and 10.9% in March. The BLS said that the energy index was the largest contributor to the monthly all items decrease, more than offsetting increases in other indexes including those for shelter and food. The index for food increased 0.2% over the month, as did the index for food at home and the index for food away from home.

Core inflation, which excludes volatile food and energy prices, also decreased, rising 2.6% over the year, following a 2.9% increase over the 12 months ending in May.

Although the recent drop in gas prices has been a positive change, including for employees under financial stress, it’s unclear if the dip in fuel prices will sustain. Gas prices are inching back up amid renewed military conflicts between the U.S. and Iran. The national average price per regular gallon of gas is $3.85 as of July 14, according to AAA, a jump from the $3.79 cost a week ago.

Article: Iran War is Lifting Gas Prices. Should Employers Help?

In other positive news for employees, real average hourly earnings for all employees increased 0.8% from May to June, seasonally adjusted, the BLS reported separately July 14. This result stems from an increase of 0.3% in average hourly earnings combined with a decrease of 0.4% in the CPI.

The inflation report comes as employers continue to grapple with persistent employee concerns about affordability, even as price pressures show signs of easing. Employee financial confidence has fallen to its lowest level since 2012, according to MetLife, while financial literacy has also fallen to a 10-year low, according to a study by investment giant TIAA and Stanford University’s Global Financial Literacy Excellence Center.

Meanwhile, 68% of employees experienced at least some financial stress in the past year, and 45% say financial concerns increased their mental stress, according to recent data from Prudential Financial.