In this morning’s data, the Consumer Price Index increased 0.2% in June, less than expected. It grew 3.0% on an annual basis, retreating from the 4.0% annual level the previous month. Monthly prices for Gasoline, up 1.0%, were relatively strong, while monthly prices for Utility (piped) Gas Service, down -1.7%, and Used Cars and Trucks, down -0.5%, were relatively weak. The core rate, which excludes prices for food and energy, increased 0.2% in June, also less than expected and two-tenths lower than the previous month. It increased 4.8% on an annual basis, less than expected and lower than the annual level the previous month.
Overall, inflation figures are less than expected for both headline and core measures. Core rates are heading in the right direction but appear stickier than the headline number and the annual rate is more than double the stated target for the Federal Reserve. The speed that core levels of inflation move toward their goal will be key for Fed officials as they contemplate further rate increases and maintain tight monetary policy. How this affects consumers, overall liquidity, and outlooks in upcoming earnings reports will be closely watched in the coming weeks.
In all, the 10-year US treasury yield is lower following the report and equity futures are higher as we head into the market open.