U.S. consumer prices rose modestly in June, with the Consumer Price Index (CPI) increasing by 0.2%. This marks the smallest monthly gain since August 2021, according to a report from the Labor Department. The CPI also climbed 3.0% year-on-year, which is the smallest rise since March 2021. The Core CPI, which excludes volatile food and energy categories, also gained 0.2% and was up 4.8% year-on-year.
The slowdown in underlying inflation has sparked a rally on the stock and bond markets, as investors believe that the Federal Reserve’s aggressive monetary policy tightening cycle is coming to an end. However, economists believe that the inflation rate is still above the Fed’s 2% target, and the labor market remains tight.
Shelter costs, which include rents, accounted for 70% of the rise in the CPI last month. There were also increases in motor vehicle insurance and gasoline prices, which rose 1.0%. These gains offset a decrease in the prices of used cars and trucks. Food prices ticked up just 0.1%, with grocery food prices remaining unchanged.
Despite the moderation in price pressures, inflation-adjusted weekly earnings for private workers rebounded by 0.5% and were up 0.6% on a year-on-year basis. President Joe Biden hailed the inflation and wages data as evidence that his economic policy, known as “Bidenomics,” is delivering results.
While the inflation rate is slowing, it remains to be seen whether it will be enough to dissuade the Federal Reserve from resuming raising interest rates this month. The central bank has signaled two rate hikes this year, including the one expected this month. Financial markets have already priced in a 25 basis points rate increase at the Fed’s July policy meeting.
Overall, the report suggests that inflation is subsiding further, but it may not be enough to completely alleviate concerns. The Federal Reserve will closely monitor the data and make decisions accordingly.
How did U.S. consumer prices change in June, and how does it compare to previous months?
U.S. consumer prices saw a modest increase in June, with the Consumer Price Index (CPI) rising by 0.2%. This is the smallest monthly gain since August 2021, according to a report from the Labor Department. On a year-on-year basis, the CPI climbed 3.0%, which is the smallest rise since March 2021. The Core CPI, which excludes volatile food and energy categories, also increased by 0.2% and was up 4.8% year-on-year.
The slowdown in underlying inflation has sparked a rally in the stock and bond markets, as investors believe that the Federal Reserve’s aggressive monetary policy tightening cycle is coming to an end. However, economists are of the opinion that the inflation rate is still above the Fed’s 2% target, and the labor market remains tight.
Shelter costs, including rents, accounted for 70% of the rise in the CPI last month. There were also increases in motor vehicle insurance and gasoline prices, which rose by 1.0%. These gains offset a decrease in the prices of used cars and trucks. Food prices saw a small increase of just 0.1%, with grocery prices remaining unchanged.
Despite the moderation in price pressures, inflation-adjusted weekly earnings for private workers rebounded by 0.5% and were up 0.6% on a year-on-year basis. President Joe Biden hailed the inflation and wages data as evidence that his economic policy, known as “Bidenomics,” is delivering results.
While the inflation rate is slowing, it remains to be seen whether it will be enough to dissuade the Federal Reserve from resuming its interest rate hikes this month. The central bank has indicated that it plans to raise rates twice this year, including one expected in July. Financial markets have already factored in a 25 basis points rate increase at the Fed’s July policy meeting.
In conclusion, the latest report suggests that inflation is continuing to subside, but there are still some concerns. The Federal Reserve will closely monitor the data and make decisions accordingly.
This article highlights the promising possibility of the inflation surge in the U.S. potentially coming to an end as consumer prices rose only modestly in June. It offers a glimmer of hope for consumers and the economy, signaling a potential stabilization after months of rising prices.
It’s encouraging to see that U.S. consumer prices rose only modestly in June, suggesting a potential end to the recent surge in inflation. This development brings a glimmer of hope for a more stable economic outlook in the months ahead.