June CPI Report - Better Than Anticipated

Inflation in June fell -0.4% month-over-month, the largest single month decrease since April 2020. Year-over-year inflation rose at a rate of 3.5%, well below the 4.2% rate logged in May and beating analyst expectations. The decrease in energy prices (-5.7%) more than offset increases in other indexes.  Core inflation, which excludes volatile food and energy prices was flat in June and up 2.6% over the past 12 months. The key question going forward is how the Federal Reserve will respond to the energy price shock. Year-to-date, the market has adjusted expectations from 50bps of cuts to 25bps of hikes. In June, unleaded gasoline prices averaged $4.05 per gallon, down from $4.48 in May.

• Consumer prices (CPI) increased 3.5% year-over-year. In June, the year-over-year rise in the consumer price index (CPI) registered 3.5%, decelerating from 4.2% in May. Energy prices have been a primary driver (+15.7%). Shelter inflation is also playing a role, with a 35% weight in the CPI basket (+3.3%).
• Consumer prices (CPI) declined -0.4% month-over-month. In June, consumer prices fell -0.4% month-over-month led by a decline in energy (-5.7%). Price increases were muted in Food (+0.2%) and core goods prices declined (-0.1%) due to declines in apparel (-0.6%) and used vehicles (-0.2%).