The CPI-U was unchanged last month following a 0.1% decline in May. The figure was below Consensus expectations for a 0.2% increase in June. During the first half of 2005 the CPI rose 3.1% at an annual rate.

Energy prices fell 0.5% led by a 1.2% drop in gasoline prices but gas prices so far in July have more than reversed recent months' declines, rising 5.6% to an average $2.28 per gallon and $2.33 in the latest week. Food prices rose a modest 0.1% for the second month.

Less food & energy prices rose the same 0.1% as in May and during the first six months of this year the core CPI is up 2.2% at an annual rate. Consensus expectations had been for a 0.2% increase in June.

Core goods prices fell for the second month in the last three. The 0.2% decline was led by a 1.3% (-2.8% y/y) drop in furniture & bedding prices and no change (+1.5% y/y) in appliance prices. Apparel prices also fell by 0.7% (-1.5% y/y) and are down 1.0% (AR) so far this year. New motor vehicle prices were unchanged (0.7% y/y) but prices for used cars & trucks rose 0.8% (7.1% y/y).

Core services prices rose a modest 0.2%. Shelter prices rose 0.2% (2.4% y/y) after two months of no change and medical care services prices rose 0.2% (4.8% y/y), the least for any month since April 2003. Public transportation prices were strong for the fourth consecutive month, up 1.2% (4.7% y/y) and school tuition costs rose 0.4% (6.6% y/y).

The chained CPI which adjusts for shifts in the mix of consumer purchases fell 0.1% and less food & energy chain prices fell for the second consecutive month.