June Sees Highest Uptick in Consumer Prices Since February
The lower 0.1% increase in May of the Consumer Price Index for All Urban Consumers (CPI-U) saw a sharp reversal in June when CPI-U increased 0.3% on a seasonally adjusted basis, and over the past 12 months increased 2.7% before seasonal adjustment compared to 2.4% in May according to the latest news release by the nation’s Bureau of Labor Statistics (BLS). The “core” index favored by economists, which eliminates food and energy, increased 0.2% compared to 0.1% in the previous month, but despite the more moderate gain, “there were some solid increases in tariff-sensitive goods.” It is believed that underlying inflation remains muted for now due to softening consumer demand limiting “price increase for services like airline fares and hotel and motel rooms,” which declined 0.1% and 3.6% respectively, and the likelihood that businesses “were still selling merchandise accumulated before President Donald Trump announced sweeping import duties in April.” Growing caution on spending by consumers and the loss of some momentum in the job market have made some economists hopeful that the recent price increases will be gradual rather than dramatic. However, economists “generally expect the tariff-induced rise in inflation to become more evident in the July and August CPI reports,” and that the Federal Reserve will remain on the sidelines until September as they await more data.