U.S. Core Inflation in June Logs Biggest Increase in 17 Months

Underlying or core inflation in the United States firmed in June with solid increases in shelter, auto and clothing prices but, overall, inflation remained relatively tame for the month and year according to government figures released Thursday, July 11, 2019.

On an annual basis, two key consumer pricing categories diverged with food costs higher and energy prices markedly lower.

U.S. consumer prices rose 0.1% in June, matching their increase in May, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a broad measure of what American consumers pay for everything from eggs to electricity.

In key pricing categories:

Excluding the more volatile food and energy components, so-called core consumer prices advanced 0.3% in June after four straight monthly increases of 0.1%. The June increase was the biggest since January 2018.

"Along with the indexes for shelter, used cars and trucks, and apparel, the indexes for household furnishings and operations, medical care, and motor vehicle insurance were among the indexes that increased in June," the Labor Department’s monthly report noted. "The indexes for recreation, airline fares, and personal care all declined in June."

Shelter or housing costs moved ahead 0.3% from 0.2%, while their year-over-year level increased to 3.5% from 3.3%. Components of shelter include pricing items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. The index accounts for about one-third of the entire CPI.

"This month’s bounce in goods inflation was due primarily to two of the more volatile categories in the series: vehicles and apparel," MarketWatch quoted senior U.S. economist Eric Winograd of AllianceBernstein. "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."

Used car and truck prices surged 1.6% after four monthly declines, new vehicle costs rose 0.1% for a third month in a row, and clothing prices jumped 1.1% after registering flat or lower in each of the previous three months.

In the headline annual figure, U.S. inflation over the past 12 months slowed to a four-month low of 1.6% from 1.8%. Annual inflation through February at 1.5% logged in as the lowest rate since September 2016.

Core inflation grew 2.1% from a year earlier after rising 2.0% in the 12 months ending May. This "all items less food and energy" index is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) as it helps the central bank decide where to set its key interest rate.

The following table of key inflation figures is for the last seven months through June, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi) on July 11, 2019. To index the data each month, the BLS monitors the prices of about 80,000 consumer goods and services from around the nation. All monthly and annual pricing changes are in percentages.

December 2018 to June 2019 Consumer Prices – Gains & Losses in Percent

  Dec 2018 Jan 2019 Feb 2019 Mar 2019 Apr 2019 May 2019 June 2019 12 Month
All items .0 .0 0.2 0.4 0.3 0.1 0.1 1.6
  Food 0.3 0.2 0.4 0.3 -0.1 0.3 .0 1.9
    Food at home 0.3 0.1 0.4 0.4 -0.5 0.3 -0.2 0.9
    Food away from home 0.4 0.3 0.4 0.2 0.3 0.2 0.3 3.1
  Energy -2.6 -3.1 0.4 3.5 2.9 -0.6 -2.3 -3.4
    Energy commodities -5.7 -5.3 1.5 6.2 5.4 -0.4 -3.5 -5.4
      Gasoline (all types) -5.8 -5.5 1.5 6.5 5.7 -0.5 -3.6 -5.4
      Fuel oil -9.4 -1.3 2.6 2.1 1.3 -0.3 -2.3 -5.6
    Energy services 1.5 -0.5 -0.8 0.3 -0.1 -0.8 -0.7 -0.7
      Electricity 0.4 -0.6 -0.3 0.4 .0 -0.8 -0.8 -0.3
      Utility (piped) gas service 5.1 -0.3 -2.4 -0.1 -0.8 -1.0 -0.3 -2.1
  All items less food, energy 0.2 0.2 0.1 0.1 0.1 0.1 0.3 2.1
    Commodities less food, energy .0 0.4 -0.2 -0.2 -0.3 -0.1 0.4 0.2
      New vehicles .0 0.2 -0.2 0.4 0.1 0.1 0.1 0.6
      Used cars and trucks -0.5 0.1 -0.7 -0.4 -1.3 -1.4 1.6 1.2
      Apparel .0 1.1 0.3 -1.9 -0.8 .0 1.1 -1.3
      Medical care -0.4 0.1 -1.0 0.4 0.9 -0.4 -0.2 -1.5
    Services less energy 0.2 0.2 0.2 0.3 0.3 0.2 0.3 2.8
      Shelter 0.3 0.3 0.3 0.4 0.4 0.2 0.3 3.5
      Transportation -0.1 -0.2 -0.1 .0 0.1 0.1 .0 0.9
      Medical care 0.4 0.3 .0 0.3 0.2 0.5 0.4 2.8

 

The BLS tends to release inflation data around the middle of a month based on consumer prices surveyed in the previous month. The Consumer Price Index (CPI) for July and the latest annual period become public on August 13, 2019.

CPI data is used in calculating inflation rates and in this site’s U.S. inflation calculator. The US Inflation Calculator shows cumulative inflation and the change in buying power of the U.S. dollar over time.

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