Today's Scoop:

Hey friends - don’t miss this past weekend’s Explained on wildfires affecting our wealth and wallets.

Here’s what you need to know today…

1. The stock market is still riding high.

2. Living costs are still rising, but not as fast as last year.

3. Egg prices are finally falling.

S&P 500: 4,369.01
1Mo: +6% | 1Yr: +17% | 5Yr: +57%

The market floated to a fresh 13-month high today after another positive inflation report. The S&P 500 index is now up 25% from its lows in October.

Living costs are still marching higher, but less quickly than last year. The Bureau of Labor Statistics reported the Consumer Price Index climbed 0.1% in May, which is back to a pretty average monthly pace. That’s driven mainly by a decline in energy prices, with gasoline prices down 5.6% in one month. Overall, everything still costs 4% more than a year ago.

Food prices are starting to come under control, with the price of eggs tumbling -14% last month. Overall food costs rose 0.2% in May after staying flat for two months.

When you strip out more volatile food and energy prices, other living costs have climbed about 0.4% each month for the past six months. That’s much lower than last year's big jumps but still higher than usual. The good news is that rent and home prices, the most significant component of inflation, have slowed or started falling in many areas. Government statistics are usually on a lag for rent costs.

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Consumer Price Index (CPI)

The Consumer Price Index (CPI) is one of the main ways economists track inflation. Inflation is the rate at which things get more expensive. The CPI looks at a set basket of stuff your average consumer spends money on and tracks how much it costs each month. The rate of change is inflation.

Prices rarely go down. It's normal for things to get more expensive. You'll never be able to buy a Coke for a quarter again, but that's ok. Low inflation (~1-2% per year) is standard and almost unnoticeable. High inflation, like we saw last year, with prices of essential goods going up nearly 7-10% per year, is a problem. It's unmanageable, especially if our incomes aren't rising in tandem.

Policymakers have been raising interest rates to slow economic activity and cool spending so prices stop rising so quickly.

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