economy news online news
By Beiyi Seow
US consumer inflation cooled in June to its lowest rate since early 2021, according to government data released Wednesday — an encouraging sign for policymakers battling cost-of-living pressures. online news
The key inflation gauge, the consumer price index (CPI), rose 3.0 percent from a year ago last month, the smallest increase since March 2021 and down from 4.0 percent in May, said the Labor Department.
The US Federal Reserve has raised interest rates rapidly over the last year to ease demand and bring down price growth.
While Fed officials have signaled that further rate hikes are likely needed to bring inflation back to their two percent target, the June CPI report will heighten market doubts about the number of additional increases needed down the line.
“Today’s report brings new and encouraging evidence that inflation is falling while our economy remains strong,” President Joe Biden said in a statement, lauding the progress made while maintaining low unemployment.
In a further positive sign, Labor Department data showed that the monthly “core” rate — excluding the volatile food and energy components — came to its lowest reading since late 2021, at 0.2 percent.
Wall Street stocks surged after the report, closing higher on hopes that inflation can come down without the world’s biggest economy tipping into a recession.
“The economy is defying predictions that inflation would not fall absent significant job destruction,” Lael Brainard, director of the National Economic Council, said in remarks to the Economic Club of New York.
While “too many Fed officials have made it clear that they think further hikes are needed,” suggesting another bump this month, a good CPI reading could change prospects as to whether a rise in September is still needed, Pantheon Macroeconomics said in a report.
According to the latest Labor Department data, the index for shelter remained the “largest contributor” to the overall monthly CPI increase and the index for car insurance also contributed — but other areas saw declines including airfares and used vehicles.
“Disinflation” ahead
“We know rents are going to roll over, over the next several months, so we’re going to see a lot of disinflation coming through the rest of this year,” said Ryan Sweet, chief US economist at Oxford Economics.
“That’s good news for consumers,” he told AFP, adding that he expects the Fed could end its tightening cycle in July.
“The labor market is showing signs of softening, inflation is coming down, we’re still on that path to a soft landing, but it’s a very narrow path,” Sweet said.
The easing of underlying inflation was driven by a “plunge in airline fares” and dip in hotel room rates, along with a drop in used vehicle prices, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Although insurance and repair costs have rocketed over the past year, “flattening demand and rising inventory are now pushing new vehicle prices down” after a surge, he said. Insurance and repair inflation will follow, he added.
Slowing to end quarter
Key parts of inflation highlighted by Fed Chair Jerome Powell, including the core readings for goods and services, have “slowed to end the second quarter,” said Rubeela Farooqi, chief US economist at High Frequency Economics.
“While inflation remains elevated, the deceleration will be welcome news to policymakers,” she added in a note.
But these data are not likely to change the outcome of a Fed officials’ meeting later this month, with a rate hike of 25 basis points the most likely outcome, Farooqi said.
bys/bfm
© Agence France-Presse. All rights are reserved.
economy news online news
Consumer Price Index June 2023
The Bureau of Labor Statistics
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in June on a seasonally
adjusted basis, after increasing 0.1 percent in May, the U.S. Bureau of Labor Statistics reported today.
Over the last 12 months, the all items index increased 3.0 percent before seasonal adjustment.
The index for shelter was the largest contributor to the monthly all items increase, accounting for over
70 percent of the increase, with the index for motor vehicle insurance also contributing. The food index
increased 0.1 percent in June after increasing 0.2 percent the previous month. The index for food at
home was unchanged over the month while the index for food away from home rose 0.4 percent in June.
The energy index rose 0.6 percent in June as the major energy component indexes were mixed.
The index for all items less food and energy rose 0.2 percent in June, the smallest 1-month increase in
that index since August 2021. Indexes which increased in June include shelter, motor vehicle insurance,
apparel, recreation, and personal care. The indexes for airline fares, communication, used cars and
trucks, and household furnishings and operations were among those that decreased over the month.
The all items index increased 3.0 percent for the 12 months ending June; this was the smallest 12-month
increase since the period ending March 2021. The all items less food and energy index rose 4.8 percent
over the last 12 months. The energy index decreased 16.7 percent for the 12 months ending June, and
the food index increased 5.7 percent over the last year.
Food
The food index rose 0.1 percent in June. The food at home index was unchanged over the month,
following a 0.1-percent increase in May. Two of the six major grocery store food group indexes
increased over the month. The index for fruits and vegetables increased 0.8 percent in June, following a
1.3-percent increase in May. The cereals and bakery products index rose 0.1 percent over the month.
The index for meats, poultry, fish, and eggs decreased 0.4 percent in June, as the index for eggs fell 7.3
percent over the month after falling sharply in May. The other food at home index decreased 0.2 percent
in June after increasing 0.4 percent the previous month. The index for dairy and related products fell 0.3
percent over the month, and the index for nonalcoholic beverages declined 0.1 percent in June.
The food away from home index rose 0.4 percent in June. The index for full service meals increased 0.3
percent over the month and the index for limited service meals increased 0.4 percent.
The food at home index rose 4.7 percent over the last 12 months. The index for cereals and bakery
products rose 8.8 percent over the 12 months ending in June. The meats, poultry, fish, and eggs index
declined 0.2 percent over the year. The remaining major grocery store food groups posted increases
ranging from 2.7 percent (dairy and related products) to 7.6 percent (nonalcoholic beverages).
The index for food away from home rose 7.7 percent over the last year. The index for full service meals
rose 6.2 percent over the last 12 months, and the index for limited service meals rose 7.8 percent over
the same period.
Energy
The energy index rose 0.6 percent in June after falling 3.6 percent in May. The gasoline index increased
1.0 percent in June, following a 5.6-percent decrease in the previous month. (Before seasonal
adjustment, gasoline prices rose 0.7 percent in June.)
Other energy components were mixed. The index for electricity increased 0.9 percent in June, after
falling in each of the preceding 3 months. The natural gas index decreased 1.7 percent over the month,
the fifth consecutive decrease in that index. The index for fuel oil also declined in June, falling 0.4
percent.
The energy index fell 16.7 percent over the past 12 months. The gasoline index decreased 26.5 percent
over the last 12 months, while the natural gas index fell 18.6 percent, and the fuel oil index fell 36.6
percent over the span. In contrast, the index for electricity rose 5.4 percent over the last year.
All items less food and energy
The index for all items less food and energy rose 0.2 percent in June. The shelter index increased 0.4
percent over the month after rising 0.6 percent in May. The index for rent rose 0.5 percent in June, and
the index for owners’ equivalent rent increased 0.4 percent over the month. The index for lodging away
from home decreased 2.0 percent in June after increasing 1.8 percent in May.
The shelter index was the largest factor in the monthly increase in the index for all items less food and
energy. Among the other indexes that rose in June was the index for motor vehicle insurance, which
increased 1.7 percent, and the index for apparel which increased 0.3 percent. The indexes for recreation
and personal care also increased in June.
Several indexes declined in June, led by the airline fares index, which fell 8.1 percent over the month
following declines in April and May. The index for communication fell 0.5 percent over the month. The
household furnishings and operations index fell 0.1 percent over the month, after declining 0.6 percent
in May. The index for new vehicles was unchanged in June.
The medical care index was unchanged in June, after increasing 0.1 percent the previous month. The
index for physicians’ services rose 0.7 percent over the month, while the index for hospital services
increased 0.4 percent. The prescription drugs index was unchanged in June.
The index for all items less food and energy rose 4.8 percent over the past 12 months. The shelter index
increased 7.8 percent over the last year, accounting for over two-thirds of the total increase in all items
less food and energy. Other indexes with notable increases over the last year include motor vehicle
insurance (+16.9 percent), recreation (+4.3 percent), household furnishings and operations (+3.6
percent), and new vehicles (+4.1 percent).
Not seasonally adjusted CPI measures
The Consumer Price Index for All Urban Consumers (CPI-U) increased 3.0 percent over the last 12
months to an index level of 305.109 (1982-84=100). For the month, the index increased 0.3 percent prior
to seasonal adjustment.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 2.3
percent over the last 12 months to an index level of 299.394 (1982-84=100). For the month, the index
increased 0.3 percent prior to seasonal adjustment.
The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 3.4 percent over the
last 12 months. For the month, the index increased 0.3 percent on a not seasonally adjusted basis. Please
note that the indexes for the past 10 to 12 months are subject to revision.
