A little bit of inflation relief

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**Kimberly Adams** (0:55)
Some relief from the pace of price increases.
From Marketplace in Washington, I'm Kimberly Adams. We got fresh consumer price index numbers this morning, and consumer prices are down for the month of June, falling 0.4% month over month, beating the expected 0.2% decline. Core CPI for the month stayed flat. Year over year, the overall inflation rate is at 3.5%, down from 4.2% in May, and still higher than the Federal Reserve's target. To discuss what it all means, joining us is Jeffrey Cleveland, Chief Economist at Payden and Regal.

**Jeffrey Cleveland** (1:31)
In this particular report, we had good news, I would say pretty much across the board. Two big categories stand out to me, the shelter component, that was very soft for the month of June. That includes things like rents and owner's equivalent rents, but also goods, goods prices have been elevated. They have been an inflation issue, really over the last year or so, given the tariffs were more than a year out from the tariff price increases. Those could be fading from the inflation data.

**Kimberly Adams** (1:59)
Speaking of prices, unless you own livestock, you probably don't think much about the price of hay, but you might just pay attention to the cost of a gallon of milk or a pound of ground beef. Those prices are related though, since hay is a big part of cattle's diets. But this year is shaping up to be a tough one in the hay business, as Marketplace's Caitlin Tan reports.

**Caitlin Tan** (2:21)
Wyoming hay producer Tom Johnston picked up my call while he was clearing out debris from an irrigation ditch. You said you're standing in a ditch literally right now.

**Tom Johnston** (2:31)
Yeah.

**Caitlin Tan** (2:32)
The ditch is a lifeline for his hay crop, but it's looking a little drier these days. Across the West, there is a drought.

**Tom Johnston** (2:39)
Because of the lack of water, there's not going to be near the hay produced as there is normally.

**Caitlin Tan** (2:44)
Over in the Midwest, hay yields may take a hit too, but not because of drought.

**Aaron Layman** (2:50)
We had an extreme rain event in my area, 12 inches in just under 12 hours.

**Caitlin Tan** (2:58)
Aaron Layman with the Iowa Farmers Union says some of the crop drowned and was ruined. For surviving hay fields, operations are expensive in part because of the Iran War.

**Aaron Layman** (3:09)
Whether it's fuel costs or fertilizer costs, or equipment costs.

**Caitlin Tan** (3:15)
That means more money spent harvesting smaller yields. So the price tag on that hay is higher for livestock owners.

**Darrell Peel** (3:22)
If hay prices are really high, then those total feed costs will go up.

**Caitlin Tan** (3:27)
Darrell Peel is an economist at Oklahoma State.

**Darrell Peel** (3:30)
If that's severe enough and lasts long enough, we wind up liquidating cattle.

**Caitlin Tan** (3:34)
That means a smaller national herd size, and shrinking herds have already led to higher beef prices. I'm Kaitlin Tan for Marketplace.

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