US Consumer Price Index rises 0.1% in June
The US CPI continues to increase on the strength of higher clothes and rent costs.
The US Consumer Price Index (CPI) core rate increased 0.1% in June, according to the US Labour Department. Excluding food and energy prices, the CPI rose 0.3% to its highest levels in almost two years.
June US CPI: key figures
| Food prices | +0.3% |
| Gasoline prices | -3.6% |
| Rent prices | +0.4% |
Food and rent costs go up, gas prices tumble down
Some statistics of the June US CPI was comparable to May’s CPI with food prices staying steady at 0.3% in May and in June. Rent costs increased by 0.4% last month. While food and rent costs grew, gasoline prices plummeted by 3.6% with oil prices falling in June. Prices of previously owned cars surged 1.6% and apparel prices were up 1.6%.
What do economic experts say about the June CPI?
Eric Winograd, senior US economist at AllianceBernstein, said that the increased CPI is an outlier and not proof of a long-term growth in inflation.
‘This month’s bounce in goods inflation was due primarily to two of the more volatile categories in the series: vehicles and apparel,’ said Winograd.
‘Both had been negative for the last few months and so the bounce this month is more likely payback for previous weakness rather than the start of a new trend,’ added Winograd.
Economist, Chris Low, also believes that the inflation increases won’t last.
‘While these increases were unexpected, there is no reason to think they will persist,’ said Low.
Will inflation statistics impact the Fed?
The Fed is monitoring inflation through the personal consumption expenditures (PCE) index to determine monetary policy. Because the PCE index is below the Fed's 2% target, Fed chair, Jerome Powell, noted in testimony before the US Congress that the US central bank believes that reduced inflation could persist.
‘There is a risk that weak inflation will be even more persistent than we currently anticipate,’ said Powell.
While Powell said the Fed would act to help the economy, it remains to be seen if the latest inflation statistics will cause the Fed to reduce interest rates in the near future.
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