Announced this morning, the headline Consumer Price Index (CPI) decreased -0.1% in June, less than expected and one-tenth less than the previous month. On an annualized basis it grew 3.0%, less than the annualized figure from the previous month. The core rate, which excludes prices for food and energy, increased 0.1% in June, also less than expected and less than the previous month’s increase. It grew 3.3% on an annual basis, which is one-tenth lower than the annualized figure from the previous month.
Reviewing the individual categories, monthly prices for Utility (piped) Gas Service, up 2.4%, were relatively strong while monthly prices for Gasoline, down -3.8%, Fuel Oil, down -2.4%, and Used Cars and Trucks, also down -1.5%, were relatively weak. Prices for Shelter were up 0.2%, two-tenths less than the levels seen in previous months.
Meanwhile, Initial Jobless Claims were 222,000 for the week ending June 6th, lower than the previous week, but still above levels seen earlier in the year.
Overall, inflation measures were less than expected in June for both the headline and core measures. Prices for shelter were also lower than in previous months. However, the core rate on an annualized basis remains above the Fed’s 2% target. Meanwhile, jobless claims were less than the previous week but above levels from earlier in the year. The labor market is becoming more balanced especially considering the unemployment rate is ticking higher, per last week’s jobs report. The Federal Reserve will be closely watched in the coming weeks for the timing of policy adjustments considering these data points.
In all, the 10-year US treasury yield moves lower following the report and equity futures are lower as we head into the market open.
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