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A closely watched inflation report due Thursday is expected to show that price pressures within the economy continued to ease in June.

Economists expect the consumer price index, which measures a range of goods that includes gasoline, health care, groceries and rent, to show that prices rose 3.1% in June, down from the 3.3% reading recorded the previous month.

On a monthly basis, inflation is seen rising 0.1%, compared to the flat reading in May.

“We expect the June CPI report to be another confidence builder following the undeniably good May report,” Bank of America economists said in an analyst note.

FED’S POWELL SAYS MORE ‘GOOD’ INFLATION DATA WOULD BOLSTER THE CASE FOR RATE CUTS

Other parts of the report are expected to point to a slower retreat in inflation. Core prices, which exclude the more volatile measurements of food and energy, are projected to climb 3.4% annually. That figure is unchanged from the gain in May, suggesting that underlying price pressures remain strong. 

The Federal Reserve’s target rate is 2%.

The central bank is closely watching the report for evidence inflation is finally subsiding as policymakers try to determine when to cut interest rates and by how much.

FED HOLDS RATES STEADY AT 23-YEAR HIGH, PROJECTS JUST ONE CUT THIS YEAR

Although policymakers left the door open to rate cuts later this year during their May meeting, they also stressed the need for “greater confidence” that inflation is coming down before easing policy. Most investors now expect the Fed to begin cutting rates in September or November and are penciling in just two reductions this year.

Inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. The burden is disproportionately borne by low-income Americans, whose already-stretched paychecks are heavily impacted by price fluctuations.

While inflation has fallen from a peak of 9.1%, when compared with January 2021, shortly before prices began to spike, the consumer price index is up nearly 20%. 

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A new survey published by LendingTree shows more households are more financially insecure than they were two years ago, even though inflation has fallen substantially since then. As of April 2024, about 36.4% of Americans expressed experiencing “significant” difficulty paying for regular household expenses, including food, rent or mortgage, car payments and medical expenses. 

That is 6.7% higher than in 2022. 

“It’s troubling that one in three American households are financially insecure,” said Matt Schulz, LendingTree chief credit analyst. “But it shouldn’t be terribly surprising. The perfect storm of record debt, sky-high interest rates and stubborn inflation has resulted in many Americans’ financial margin of error shrinking to virtually zero.”

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