U.S. inflation cools again, but not on Long Island, in New York metro area

WASHINGTON — Inflation in the United States cooled in June for a third straight month, a sign that the worst price spike in four decades is steadily fading and may soon usher in interest rate cuts by the Federal Reserve.

The opposite took place in the 25-county metropolitan area that includes Long Island: the Consumer Price Index here climbed 4.2% last month, compared with June 2023. That rate of year-over-year growth was slightly higher than May's 3.9%, the U.S. Labor Department said on Thursday.

Nationwide, consumer prices were up 3% in June, compared with a year earlier — and cooler than May's 3.3% annual rate.

In the better-than-expected report, prices declined 0.1% from May to June, the first monthly decline in overall inflation since May 2020, when the U.S. economy was paralyzed by the pandemic.

The national inflation readings will likely help convince the Fed’s policymakers that inflation is returning to their 2% target. The policymakers said they would need to see several months of mild price increases to feel confident enough to cut their key rate from its 23-year high.

“This confirms that there is very little chance of inflation re-accelerating and that it’s time for some rate cuts from the Fed," said Luke Tilley, chief economist at Wilmington Trust, a wealth management firm.

Even as inflation slows, the costs of food, rent, health care and other necessities remain much higher than they were before the pandemic — a source of public discontent and a potential threat to President Joe Biden’s reelection bid.

In June, gas prices plunged for a second straight month, tumbling 3.8% on average nationwide from May. (They did pick up this month and averaged $3.54 nationwide Thursday, up 10 cents from a month earlier, according to AAA.)

Grocery prices ticked up by a slight 0.1% last month, the first increase in five months. Still, food prices are up, on average, 21% from March 2021, when inflation started to surge, although Americans' average wages have also risen sharply since then.

Rental and homeownership costs, which make up more than one-third of the entire consumer price index, rose at a slower pace last month, up 0.3% from May to June. However, compared with a year earlier, rents in June were still up 5.1%, a much faster rate than before the pandemic.

In the metropolitan area, the cost of housing and utilities were key factors behind the year-over-year increase in consumer prices in June compared with the decline nationwide, according to William J. Sibley, regional commissioner for the federal Bureau of Labor Statistics, which produces the price index.

Residential rents were up 4.8% last month, compared with June 2023. The cost of electricity and natural gas also climbed 16.9% and 8.3%, respectively.

"Inflation may be more resistant on Long Island relative to other areas of the United States due in part to the acute shortage of apartment space," said John A. Rizzo, an economist and a Stony Brook University professor. "This will bid up the prices for homes as affordable apartment space is challenging to find" in Nassau and Suffolk counties.

He also noted the spike in electricity prices in recent months but said "this is probably an anomaly that will not affect inflation on Long Island over the longer term."

Other spending categories where prices climbed in June, compared with a year earlier, included groceries and recreation, which rose 1.2% and 7.4%, respectively. The latter increase "reflects strong demand for leisure activity on Long Island during the summer tourist season," Rizzo told Newsday.

The price rises were partially offset by declines in the cost of gasoline and medical care, which fell 1% and 1.3%, year over year, respectively.

With James T. Madore