**MNI 5 THINGS: US June CPI Soft +0.1%,Core As-Expected +0.2%>

--5 Things We Learned From The June CPI Data

By Kevin Kastner, Sara Haire, and Harrison Clarke

     WASHINGTON (MNI) - The following are the key points from the 

Consumer Price Index data for June released by the Bureau of Labor 

Statistics Thursday: 

     - June CPI rose 0.1% month/month overall, a bit softer than the 

0.2% gain expected by analysts and markets, but before rounding it was 

+0.129%, on the way to being rounded up. Core prices were up 0.2%, as 

expected, so the market reaction should be minimal. As highlighted in an 

MNI 5 Things, analysts have a track record of being very accurate with 

predicting June CPI. 

     - Core CPI was +0.162% unrounded, so on the low side of +0.2%. The 

large owners' equivalent rents category rose 0.3%, while medical care 

prices rose 0.4%, and new vehicle prices rose 0.4%. Additionally, used 

vehicle prices rose 0.7%, breaking a string of declines. Providing some 

offset, apparel prices were down 0.9% and lodging away from home prices 

fell 3.7%. 

     - As with the overall figure, the core CPI data are generally well 

forecasted by analysts, so today's data continue with that trend. The 

data also suggest a further increase for the core PCE price index. 

     - The y/y rate for headline CPI accelerated to 2.9% in June vs 2.8% 

in May, hitting the highest point since February 2012. At the same time, 

the y/y rate for core CPI rose to 2.3% from 2.2%, the highest since 

January 2017. Overall, the data suggest modest, but continued, 

acceleration in inflation what will allow the FOMC to continue on its 

gradual rate hike path. The one bump in the road is that rising 

inflation has compressed real average hourly earnings, which rose only 

0.1% in June and were flat year/year. 

     - Energy prices fell by 0.3% in June after a 0.9% increase in May, 

with gasoline prices up 0.5%, but electricity prices down 1.4% and gas 

utilities prices down 1.7%. Energy prices were actually up 1.0% 

unadjusted, so seasonal adjustment factors were a subtraction as prices 

for electricity and gasoline at the start of the summer did not jump as 

quickly as usual. CPI excluding only energy was up 0.2%, while food 

prices rose 0.2%. 

     ** MNI Washington Bureau: 202-371-2121 ** 

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