Consumer Prices 'Deflated' Most Since COVID Lockdowns In June; Core Prices Continue To Rise
Who could have seen this coming?
From 3 months ago.
— zerohedge (@zerohedge) July 11, 2024
We are now headed for an epic perfect storm of Fed cuts just as rents rise again https://t.co/S9eUCo5Bbn
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Expectations for more 'evidence' of a return to disinflationary trends were high heading into today's CPI and they were more than satisfied by a 0.1% MoM decline in headline consumer prices in June (below the +0.1% MoM exp) - the biggest MoM drop since May 2020. That pulled the headline YoY CPI down to +3.0%...
Source: Bloomberg
This is the third consecutive 'miss' for CPI - prompting calls for July rate-cuts - with 3m and 6m annualized inflation declining...
But July odds remain low still for now...
Headline CPI Breakdown:
The all items index rose 3.0 percent for the 12 months ending June, a smaller increase than the 3.3- percent increase for the 12 months ending May. The energy index increased 1.0 percent for the 12 months ending June. The food index increased 2.2 percent over the last year. The index for gasoline fell 3.8 percent in June, after declining 3.6 percent in May, more than offsetting an increase in shelter. The energy index fell 2.0 percent over the month, as it did the preceding month. The index for food increased 0.2 percent in June. The food away from home index rose 0.4 percent over the month, while the food at home index increased 0.1 percent
The gasoline index decreased 3.8 percent in June. (Before seasonal adjustment, gasoline prices fell 3.9 percent in June.)
The electricity index decreased 0.7 percent over the month and the fuel oil index decreased 2.4 percent.
The index for natural gas rose 2.4 percent in June.
The energy index increased 1.0 percent over the past 12 months. The gasoline index fell 2.5 percent over this 12-month span. The index for electricity increased 4.4 percent over the last 12 months and the index for natural gas rose 3.7 percent
A deflation in Energy costs and core goods dominated the data in June...
Both Goods and Services inflation fell on a YoY basis (Goods deflation at its biggest since Feb 2004)
Core CPI also 'missed', rising just 0.1% MoM (vs +0.2% exp), dragging the YoY Core CPI down to +3.27% - its lowest since April 2021...
Source: Bloomberg
Goods deflation also dominates core prices disinflationary trend...
Core CPI:
The index for all items less food and energy rose 0.1 percent in June - the smallest increase in this index since August 2021 - after rising 0.2 percent the preceding month. Indexes which increased in June include shelter, motor vehicle insurance, household furnishings and operations, medical care, and personal care. The indexes for airline fares, used cars and trucks, and communication were among those that decreased over the month.
The shelter index increased 0.2 percent in June. The index for rent rose 0.3 percent over the month, as did the index for owners’ equivalent rent; these were also the smallest increases in these indexes since August 2021. The lodging away from home index decreased 2.0 percent in June, after falling 0.1 percent in May.
The medical care index rose 0.2 percent in June after rising 0.5 percent in May. The index for physicians’ services rose 0.1 percent over the month, as did the index for hospital services. The prescription drugs index was unchanged in June.
The motor vehicle insurance index rose 0.9 percent in June, following a 0.1-percent decrease in May.
The index for household furnishings and operations increased 0.5 percent over the month.
The indexes for personal care, education, recreation, and apparel also increased in June.
The index for airline fares fell 5.0 percent in June, following a 3.6-percent decrease in May.
Over the month, the used cars and trucks index fell 1.5 percent, the communication index decreased 0.2 percent, and the new vehicles index declined 0.2 percent.
Focusing on the housing side of Core CPI, we note that the disinflationary trend is accelerating:
Shelter inflation June 5.16% YoY, down from 5.41% in May and the lowest since May 2022
Rent inflation June 5.07% YoY, down from 5.30% in May and the lowest since April 2022
We do note that Core consumer prices have still not seen a single monthly decline since Bidenomics began.
Core consumer prices are up just under 18% since Bidenomics began (+4.9% per annum) - that is dramatically higher than the 2.0% per annum Americans experienced under Trump...
Core consumer prices have never been higher.
The much-watched SuperCore CPI rose on a MoM basis but declined (back below 5.0%) on a YoY basis (but obviously remains extremely elevated)...
Source: Bloomberg
Transportation Services are seeing prices fall...
Removing auto insurance would cut SuperCore CPI in half... if only we didn't actually have to pay that!
Finally, we can't help but get a sense of deja vu all over again here. What if... The Fed cuts (because bad - recession - data), Biden loses (because dementia), and inflation re-accelerates (just like in the 80s)...
Source: Bloomberg
Who do you think gets the blame for the re-inflation? Well, 'economists' have already begun claiming Trump's tariff plan will prompt spiralling higher prices... so we have our answer.
There are no coincidences in Washington.. or Washington-based data.
