The REAL reason inflation remains high: flour is stubbornly expensive but cost of bacon is falling

Overstretched households were offered some respite today after it emerged inflation had slowed to 4 percent.

The rate of annual inflation is now at its lowest level since March 2021, in what President Biden has described as 'good news for hard-working families.' 

But despite falling well below last June's peak of 9.1 percent, the figure still remains double the Federal Reserve's target of two percent. 

A breakdown of the data by Dailymail.com reveals housing costs are pushing up the overall rate, while the price of certain food products such as flour and frozen vegetables also remain stubbornly high.

Meanwhile the price of energy and gasoline has plummeted, contributing to the overall slowing of rates. 

A breakdown of the data by Dailymail.com reveals products such as flour and frozen vegetables remain stubbornly high while energy prices are crashing down

We analyzed the products that both affect consumers most and had seen the biggest rises and falls in costs. 

For example, shelter and gasoline are watched closely by the Federal Reserve as key markers of inflation due to the fact they affect nearly every consumer.

Across the board, food prices rose 0.2 percent in May from the month prior, while prices for groceries increased 0.1 percent. 

The cost of flour in particular has remained stubbornly high and is now 17.8 percent more expensive than it was 12 months ago.

Flour has also been hampered by supply chain disruptions as well as increased global demand for wheat.

It has had a knock-on effect on products such as white bread which remains 13.4 percent more expensive than it was last year. 

Cakes, cupcakes and cookies are similarly up 11 percent, according to the figures compiled by the US Labor department. 

By comparison the price of eggs has come crashing down by 13.8 percent in just the last month. 

Dailymail.com last week revealed that discount store Dollar Tree had started selling eggs again - after removing them from shelves due to rampant inflation in March. 

Eggs were initially seen as the 'poster child' for inflation as a widespread avian flu caused their prices to sky-rocket. But experts say the industry has recovered quickly from the crisis, causing prices to crash back down.

Compared to last year, they are only 0.4 percent cheaper. However this is likely because egg prices were relatively stable last May and only peaked in December 2022. 

The cost of gasoline fell by 19.7 percent between May 2022 and May 2023

The cost of flour in particular is now 17.8 percent more expensive than it was 12 months ago, pushing up the price of white bread 

While food and groceries were previously keeping inflation high, it now appears that housing and shelter is the main driver behind the figures. 

Shelter costs - which includes rent - have risen by 8 percent in the last year. 

It comes after a new report showed rent growth is outpacing increases in income across the country with average rents now 134.9 percent higher than 1999. 

However it's not all bad news for tenants as the latest inflation figures show rents fell by 0.1 percent in the last month - the first time they have dropped in roughly two years.

The good news is that inflation is being driven down by the plummeting cost of energy and gasoline - both of which were pushed up globally due to Russia's invasion of Ukraine last year. 

The figures show that gasoline is now 19.7 percent cheaper than it was last year, while energy overall had dropped 11.7 percent. 

Energy prices were long predicted to fall this year due to the expansion of cheap, renewable electricity. 

And the drop in energy prices had knock-on effect on public transportation which saw costs drop 8.9 percent in the last year. 

Perhaps more surprisingly, the cost of airline fares has also decreased by 13.4 percent in the last year. 

It comes after consumers were warned to avoid 'vacation inflation' this year. 

The rate of annual inflation is now at its lowest level since March 2021, in what President Biden has described as 'good news for hard-working families

Across the board, food prices rose 0.2 percent in May from the month prior while prices for groceries increased 0.1 percent

Although wholesale costs are coming down, it may still take time before shoppers start to feel the savings at the grocery store. 

Firms have come under fire for engaging in so-called 'greedflation' practices - whereby they exploit headlines about inflation to drive up their prices and maximize profits. 

Last month experts hit out at PepsiCo. and McDonald's for appearing to push up prices to artificial highs. 

PepsiCo, which owns big-name household brands such as Gatorade, Doritos, Tropicana and Lay's potato chips, reported at the end of April that it had increased the price across its products by an inflation-busting average of 16 percent in the first three months of this year.

Meanwhile McDonald's revealed last month that higher prices had boosted sales in the first quarter by four percent to $5.9billion, compared to this time last year. 

A Big Mac now costs as much as $5.31, according to data from CashNetUSA, up from $4.33 in 2012.