Another Disappointing U.S. Consumer Prices Report

Consumer prices continued to soar in June. The Consumer Price Index surged 1.3% m/m after a 1.0% monthly increase in May. The y/y rate rose from 8.6% to 9.1%, the highest reading since November 1981. The Action Economics Forecast Survey had expected a 1.1% m/m increase. The core index (that is, excluding food and energy prices) advanced 0.7% m/m in June versus a 0.6% m/m increase in May. The y/y rate slowed for the third consecutive month to 5.9% y/y in June from 6.0% in May. The recent high in the y/y core rate was 6.5% in March. The Action Economics Forecast Survey had anticipated a 0.5% monthly gain in the core index.

While the June rise was broadly based, sharply rising food and energy prices continued to play a leading role. Energy prices increased 7.5% m/m in June after a 3.9% m/m rise in May. Their 41.6% y/y advance in June was the fastest annual increase since April 1980. An 11.2% m/m surge in gasoline prices led the monthly rise in overall energy prices. The price of natural gas rose 8.2% m/m in June on top of an 8.0% monthly gain in May. By contrast, the price of fuel oil fell 1.2% m/m, the first monthly decline since last December, but this was after a 16.9% m/m jump in May.

Food prices jumped up 1.0% m/m in June versus 1.2% in May with the y/y rate rising to 10.4%, its highest rate since February 1981. In the first six months of this year, food prices have risen at a 12.5% annual rate. While prices generally rose across all major food categories, the price of meat, poultry, fish and eggs slipped 0.4% m/m in June, the first monthly decline since September 2020, after four consecutive months of increases greater than 1% m/m.

Prices of commodities less food and energy rose 0.8% m/m (7.2% y/y) in June versus a 0.7% monthly increase in May. The y/y rate has now slowed for four consecutive months from a recent high of 12.3% y/y in February. New vehicle prices rose 0.7% m/m in June, down from a 1.0% m/m advance in May, while used vehicle prices posted another solid gain of 1.6% m/m on top of a 1.8% monthly rise in May. Apparel prices increased 0.8% m/m in June, up slightly from their 0.7% m/m advance in May.

Services prices less energy services rose 0.7% m/m (5.5% y/y) in June, roughly the same as in each of the prior three months. The cost of shelter, the largest component of this category, rose 0.6% m/m (5.6% y/y) in June, the same monthly advance as in May and the highest since March 2004. The 5.6% annual rate of increase was the highest since February 1991. The price of other lodging away from home (which includes hotels and motels) fell 3.3% m/m in June. Prices of medical services gained 0.7% m/m (4.8% y/y). These prices rose 9.5% from January to May. The monthly increase was the largest since October 2019. Transportation services prices jumped up 2.1% m/m in June notwithstanding a 1.8% m/m decline in airfares following a 12.6% m/m surge in May.

The Consumer Price Index data can be found in Haver's USECON database with additional detail in CPIDATA. The Action Economics survey figure is in the AS1REPNA database.