Consumer prices climbed at their slowest annual pace since early 2021, although they ran a bit quicker during the month of June compared to May, according to a report from the U.S. government released on Wednesday, July 12.
In comparison to prices a year ago, food prices were still elevated, while energy prices exhibited a sharper decline. When excluding energy and food, housing costs continue to stand out as the major contributor to the upward inflation pressures.
In the headline monthly figure, U.S. consumer prices in June rose by 0.2%, compared to a 0.1% rise in May, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a closely watched inflation gauge that measures what Americans consumers pay for everyday items, ranging from eggs to electricity.
For the month, overall food prices rose by 0.1% after increasing by 0.2% in May. Within the food category, grocery prices remained flat, following an increase of 0.1% in May. Furthermore, the cost of eating out continued to increase, but to a lesser extent, rising by 0.4% compared to the previous month’s 0.5% increase.
Meanwhile, food inflation over the past year was high at 5.7%, but down from 6.7%. During the same period, grocery prices increased by 4.7%, while the cost of food consumed outside of the home increased by 7.7%, compared to their respective previous rising rates of 5.8% and 8.3%.
In other areas, prices at the pump moved up by 1% in June, following a 5.6% drop in May. On a year-on-year basis, gas prices tumbled 26.5%, compared to a previous fall of 19.7%. To provide some perspective, gasoline inflation in the 12 months ending in June 2022 soared by 59.9%, the highest level since March 1980.
The broader index for energy, which includes items like gasoline, electricity, and fuel oil, increased by 0.6% in the month of June, after falling by 3.6% in May. Energy prices year-over-year decreased by 16.7%, even lower than previous 11.7% fall.
Excluding the more volatile food and energy components, the rate of core consumer prices in June rose by 0.2%, following three consecutive gains of 0.4%. The increase was the smallest since August 2021.
Shelter or housing prices grew by 0.4% for the month, slowing somewhat from 0.6% in the prior month, but still registered a sizable year-over-year increase of 7.8%. For some recent comparisons, they logged gains of 8% in May, 8.1% in April, and 8.2% in March, marking their largest 12-month jump since June 1982.
"The index for shelter was the largest contributor to the monthly all items increase, accounting for over 70 percent of the increase," the Labor Department’s monthly report said.
Components of shelter include prices of items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. This index accounts for about one-third of the entire CPI.
In other closely watched pricing areas:
- Clothing prices rose 0.3% for a fourth month. They increased 3.1% from a year ago.
- New vehicle prices were flat in June after decreasing by 0.1% in May and falling by 0.2% in April, when they broke a streak of 23 straight advances. Nevertheless, they still increased by 4.1% year-over-year.
- Prices for used cars and trucks slipped by 0.5% after two 4.4% monthly increases. Before then, they marked nine consecutive monthly declines. Compared to prices from a year ago, they have decreased by 5.2%. This is in stark contrast to February of last year when they had a soaring year-on-year pace of 41.2%.
- Compared to a year earlier, airline fares sank 18.9%. In June, they dropped 8.1% following a decline of 3% in May.
In terms of the headline annual figure, inflation increased by 3% from a year earlier, which is slower than the 4% rate reported previously. For a second time, this represents the smallest inflation rate since March 2021.
For some perspective, the highest inflation rate in the past year occurred in the 12-month period ending in July, which was at 9.1% — the fastest rate of inflation since November 1981. Additionally, until March of this year, inflation rates had been at or above 6% for seventeen consecutive months.
Meanwhile, core inflation increased by 4.8% over the past year, down from 5.3% previously. This core, "all items less food and energy" index is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) to guide the central bank in setting its key interest rate. The current pace is the slowest since October 2021. As recently as September, the core inflation rate at 6.6% was the highest since August 1982. Many economists consider the core reading as a better predictor for future inflation.
"There has been significant progress made on the inflation front, and today’s report confirmed that while most of the country is dealing with hotter temperatures outside, inflation is finally cooling," CNBC quoted George Mateyo, chief investment officer at Key Private Bank. "The Fed will embrace this report as validation that their policies are having the desired effect — inflation has fallen while growth has not yet stalled."
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 12, 2023. 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 2022 to June 2023 Consumer Prices – Gains & Losses in Percent
(Seasonally Adjusted from Prior Month and Unadjusted 12-Month)
|Dec 2022||Jan 2023||Feb 2023||Mar 2023||Apr 2023||May 2023||June 2023||12 Month|
|Food at home||0.5||0.4||0.3||-0.3||-0.2||0.1||0.0||4.7|
|Food away from home||0.4||0.6||0.6||0.6||0.4||0.5||0.4||7.7|
|Gasoline (all types)||-7||2.4||1||-4.6||3||-5.6||1.0||-26.5|
|Utility (piped) gas service||3.5||6.7||-8||-7.1||-4.9||-2.6||-1.7||-18.6|
|All items less food, energy||0.4||0.4||0.5||0.4||0.4||0.4||0.2||4.8|
|Commodities less food, energy||-0.1||0.1||0.0||0.2||0.6||0.6||-0.1||1.3|
|Used cars and trucks||-2||-1.9||-2.8||-0.9||4.4||4.4||-0.5||-5.2|
|Services less energy||0.6||0.5||0.6||0.4||0.4||0.4||0.3||6.2|
The BLS releases inflation data around the middle of the month for consumer prices surveyed up to the previous month. The Consumer Price Index (CPI) for July and the latest annual period will be made public on Aug. 10, 2023.
The CPI data is also used to calculate inflation rates and to power this site’s U.S. Inflation Calculator. The U.S. Inflation Calculator displays the cumulative inflation and the change in the buying power of the U.S. dollar over time.