Two important inflation reports released last week indicated that overall pricing pressures have retreated from peaks in 2022. But both also confirmed that inflation remains above the Fed's target of 2.0% and progress to that level may be hard to achieve. With the Consumer Price Index (CPI) report, there were some positive results. The overall inflation rate in June was 3.0%, lower than the prior month's 3.3%. That good news was further supported by a decline in core CPI, which excludes the impact of food and energy and rose at an annual pace of 3.3% over the past year, lower by 10 basis points month over month. What's propping up that core CPI? Transportation Services (+9.4% YOY) and Shelter (+5.2% YOY), which have prices that don't typically fall sharply. In contrast, prices for Gasoline and New & Used Cars are actually lower YOY. The other inflation report was the Producer Price Index (PPI), which measures pricing trends farther up the supply chain, at the manufacturing level. Here, we also saw a modest increase in the rate of inflation. The PPI final demand annual rate through June was 2.6%, compared to 2.2% in May, and the prices for processed goods for intermediate demand outright declined. The June 2022 CPI rate marked the peak reading for the index that cycle, and we expect pricing pressures to continue to ease as the housing market cools, supplies of new vehicles are replenished, and the price of oil stays below $90 per barrel. The Fed lifted the feds fund rate from 0.0% to above 5.25% over the past 24 months, and the rate hikes appear to be reducing inflationary pressures. We still look for the U.S. central bank to be lowering rates in 2H24 and 1H25 as concern shifts more toward economic growth.