Consumer Prices Inch Down
U.S. consumer prices declined unexpectedly in June, the second straight month of “tame” readings (, subscription).
What’s going on: “The consumer price index dipped 0.1% last month after being unchanged in May, the Labor Department’s Bureau of Labor Statistics said on Thursday.”
- In the 12 months through June, the CPI rose 3.0% following a 3.3% increase in May.
- Reuters-polled economists had forecast a 0.1% rise for the month and a 3.1% year-on-year gain.
The big picture: “The annual increase in consumer prices has slowed from a peak of 9.1% in June 2022. The CPI is running far ahead of the measures tracked by the Fed for its 2% inflation target. The Personal Consumption Expenditures (PCE) price indexes both increased 2.6% in May.”
However … The report follows news last week that the unemployment rate rose to a two-and-a-half year high.
- And economic growth has slowed in response to the Federal Reserve’s interest rate hikes in 2022 and 2023.
- Fed Chair Jerome Powell told Congress this week that more data is still needed to declare “inflation beaten.”
What it means: Still, the CPI report is “reinforcing views that the disinflation trend was back on track and drawing the Federal Reserve another step closer to cutting interest rates.”