Inflation cooled more than expected in May: What it means for you

Just a few minutes ago, we received the latest numbers on inflation. They're slightly lower than what experts predicted. Meantime, later today, there's a big decision coming on interest rates and that's going to impact everything from credit cards to mortgages. Here to break it all down as nobody else can. NBC News senior business correspondent for that, Christine Romans. Christine, So what's the deal? We we got these numbers that were a little lower than expected, 3.3%. A little cooling on the inflation story and month to month inflation didn't get worse. So that's good. But it's still not normal. We're not at normal inflation levels. So that's something what would be normal? Well, the Fed says more like 2%. So, you know, inflation's still too high for the Fed really to be cutting interest rates here. But we did see gas prices a big driver of this, of this relief. If you look at the if you're, if you're filling up, you know that you're paying a lot less today than you were last year. So gas prices, some relief, but shelter prices, rent and housing prices still running really hot. So that's why you have an overall inflation number that's still above 3%. So that would impact people trying to get a loan or, you know, if you're racking up credit card debt, the insurance on that. So what can folks do to kind of keep those costs down if they have to borrow money? S We're expecting the Fed later today to not lower interest rates because inflation is still too high in the overall U.S. economy is still too strong. The World Bank calling it exceptional. the US economy, a lot of consumers don't feel very exceptional about it. So if you're borrowing money, be very careful. Be very careful with your budget this summer. This is a big spending season. You don't want to be carrying a balance on your credit card at 2025, even 30% interest. Pay down debt if you can. Debt is really a burden at high interest rates. And invest in a high yield savings account. If you have a little bit of savings, you can get four or 5%. It's a rare moment where boring savers are rewarded for putting their money away in a high yielding savings account. So do that if you have savings for a house you can't in the housing market. You're trying to save up for down payment. It's a perfect time to be saving that money. What about savings for coffee? Even Starbucks is getting it. Yes. This is really the first time that they've done something like this, right? It's really interesting the value wars. Consumers are fed up. They're so fed up with high inflation and they're voting with their feet. They're walking away if something is too much. And so now Starbucks is the latest chain to come out with a bundle deal. So you can get a tall iced or hot coffee or tea and a butter croissant for 5 bucks. That is a good number for a Starbucks price. If you wanted a breakfast sandwich that has meat and an egg, that's $6. So it's Starbucks acknowledging the people got tired of high prices. You've seen a lot of retailers cutting their prices as well on thousands and thousands of items because Americans are like, you know what, you raise prices for two years, you know, show me the money, Christian. Here's a question if, if these numbers are so good and you know, people are making more money and granted, you know, food prices and things are still high, but by all metrics it seems like things are going so well. Why do people feel so sour about the economy? Something in behavioral economics called price references or reference prices. We still in our mind remember going to the grocery store and spending 100 bucks on groceries and now it's 200 and it really shocks people every single time. And inflation is cooling, not as much as you like, but cooling. But it's on top of year you two years of just higher prices adding up. So people are still very, I think, scarred by inflation and that kind of wipes away any kind of optimism about other things. We the people are traveling and they're they're Oh my God, you can't get a you can't get a hotel reservation. You can't get into A to eat at a nice restaurant. You know, the airlines are packed. By the way, the airline fares fell in the CPI report. So that's good news. If you're trying to book. It's like, I'm just trying to go visit my mom and I'm like, really to go to Florida. Don't go where Dylan's going. Florida. Thank you. Nice to see you guys. Thanks, Chris. Alright.