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Economy in Brief

U.S. Consumer Price Inflation Shows Unexpected Strength in June
by Tom Moeller  July 13, 2021

• Year-to-year increase is highest since August 2008.

• Core goods & services prices post firm gains.

• Food & energy prices improve.

Price inflation at the retail level is accelerating. The Consumer Price Index rose 0.9% (5.4% y/y) during June after rising an unrevised 0.6% May. A 0.5% increase was expected in the Action Economics Forecast Survey. The CPI excluding food & energy also jumped 0.9% last month after rising 0.7% in May. The 4.5% y/y increase was the strongest since late-1991. A 0.5% June rise had been expected.

During the last six months, the CPI surged 7.3% (AR) while the core CPI increased 6.2%.

Goods prices excluding food & energy strengthened 2.2% (8.7% y/y) last month after rising 1.8% during May and 2.0% in April. Used car & truck prices strengthened 10.5% (45.2% y/y) while new vehicles jumped 2.0% (5.3% y/y). Apparel prices also were strong and rose 0.7% (4.9% y/y) following a 1.2% jump during May. Furniture prices improved 0.1% (3.4% y/y) after rising 0.9% for two straight months. Appliance prices also gained 0.1% (5.8% y/y) following a 0.8% increase. Elsewhere, prices fell. Medical care product prices edged 0.4% lower (NSA) and fell 2.2% y/y. Recreation product prices eased 0.3% (+3.2% y/y) after improving 0.4% in May. Education & communication product costs slipped 0.2% (-1.2% y/y), the fourth monthly decline this year.

Services prices increased 0.4% (3.1% y/y) as they did in May. Shelter costs rose 0.5% (2.6% y/y), the largest monthly increase since October 2005. The cost of lodging away from home surged 7.0% (15.1% y/y), the third month of strength in the last four. The owners' equivalent rent of primary residences increased a steady 0.3% (2.3% y/y). Rents of primary residences gained 0.2% (1.9% y/y) for the fifth straight month. Transportation services prices surged 1.5% (10.4% y/y), strong for the fourth consecutive month, as the cost of public transportation jumped 2.4% (17.3% y/y). Airline fares strengthened 2.7% (24.6% y/y). Recreation services prices rose 0.5% (1.9% y/y) after a 0.2% gain. Education & communication services prices edged 0.1% higher (2.4% y/y). Medical care services prices held steady (1.0% y/y) as they as they did over the prior three months.

Energy prices surged 1.5% in June (24.5% y/y) following little change over the prior two months. Gasoline prices jumped 2.5% in last month (45.1% y/y) after two months on decline. Fuel oil prices rose 2.9%, NSA (44.5% y/y) after rising 2.1%. Natural gas prices strengthened 1.7% (15.6% y/y) for the second straight month but the cost of electricity eased 0.3% (+3.8% y/y) and reversed the May rise.

Food price inflation strengthened last month to 0.8% (2.4% y/y), up from two straight 0.4% gains. Food-at-home prices also rose 0.8%, but by a reduced 0.9% y/y. Meat, poultry & fish prices surged 2.5% (0.6% y/y) while egg prices jumped 3.0% (1.0% y/y). Dairy prices improved a lessened 0.2% (0.8% y/y) as cereal & bakery product costs fell 0.3% (+0.2% y/y), after two months of strong increase. Fruit & vegetable prices jumped 0.7% (3.2% y/y) following no change in May. Nonalcoholic beverage prices strengthened 0.9% (0.2% y/y). Prices for food away-from-home rose 0.7% (NSA). The 4.2% y/y increase is strengthened from 2.1% in the middle of 2017.

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.

Do Households Expect Inflation When Commodities Surge? from the Federal Reserve Bank of San Francisco can be found here.

Consumer Price Index, All Urban Consumers (% chg) Jun May Apr Jun Y/Y 2020 2019 2018
Total 0.9 0.6 0.8 5.4 1.2 1.8 2.4
Total less Food & Energy 0.9 0.7 0.9 4.5 1.7 2.2 2.1
  Goods less Food & Energy 2.2 1.8 2.0 8.7 0.1 0.2 -0.2
  Services less Energy 0.4 0.4 0.5 3.1 2.2 2.8 2.9
 Food 0.8 0.4 0.4 2.4 3.4 1.9 1.4
 Energy 1.5 -0.0 -0.1 24.5 -8.5 -2.1 7.5
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