**MNI DATA IMPACT: US May CPI Above-Expected +0.1%, Core +0.3%>

--Core CPI Above +0.2% Expected; Owners Equivalent Rent +0.3%

--Apparel Prices Up 1.1% Following Flat Reading in May

--Jobless Claims Down 13k to 209k in July 6 Week

By Kevin Kastner, Brooke Migdon and Alexandra Kelley

     WASHINGTON (MNI) - The June CPI data were above expectations, 

but overall year/year inflation slipped modestly, data released by the 

Bureau of Labor Statistics Thursday showed. 

     Overall CPI increased by 0.1%, above the expected flat reading 

predicted by both the Bloomberg and MNI consensus, while core prices 

were up 0.3%, also above the forecasted 0.2% gain. The year/year rate 

for core CPI ticked up to +2.1% from +2.0% in May.

      Also released on Thursday, the level of initial jobless claims 

declined by 13,000 to 209,000 in the July 6 week, below the 221,000 

level expected by Bloomberg and MNI. The four-week average also fell to 

219,250, a decline of 3,250.                 

     Here are some of the key takeaways from the data released 

Thursday: 

     - The core CPI reading was up 0.294% unrounded, on the low 

end of a 0.3% reading. 

     - Apparel prices, which were expected to remain flat after three 

consecutive months of decline and a flat reading in May, posted a 

surprise 1.1% increase in June. 

     - The major core components were highlighted by widespread gains. 

The large owners' equivalent rents category increased by 0.3% and 

medical care was up 0.3%. New vehicle prices additionally rose by 0.1%, 

and used vehicle prices increased by 1.6% after declines in the previous 

two months. Recreation prices, however, fell by 0.2%.  

     - Energy prices declined by 2.3% in June following a smaller 

decline in May and solid gains in the previous four months, with 

gasoline prices down 3.6%. Electricity prices were down as well, falling 

by 0.8% and gas utilities prices decreased by 0.3%. CPI excluding only 

energy was up 0.3%, while overall food prices were flat.  

     - Despite the stronger-than-expected 0.1% rise in overall CPI, the 

year/year rate slowed to +1.6% from the +1.8% gain posted in May. 

Excluding only energy, the year/year rate was 2.1%, and the year/year 

rate for core prices increased to 2.1% from a 2.0% reading in May, 

holding in the same tight range seen so far in 2019. 

     - The four-week moving average for claims decreased by 3,250 to 

219,250 in the July 6 week and is expected to decline in the coming 

weeks as the 217,000 level posted in the June 8 week drops out of the 

calculation. 

     - Unadjusted claims increased by 8,160 to 232,688, likely a result 

of auto plant retooling shutdowns, which frequently occur during the 

fist few weeks of July. Seasonal factors account for this spike, 

expecting initial claims to rise early in the month and fall during the 

later half. In the July 8 week, seasonal factors looked for a gain of 

23,342 from the previous week. 

     - Continuing claims rose by 27,000 to 1.723 million in the June 29                                         

week. The four-week average increased by 5,750 to 1.695 million. The 

rate of insured unemployment was 1.2%, unchanged from the previous week 

and the year-ago rate.                                                                                    

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

[TOPICS: MAUDS$,MT$$$$,M$U$$$,MAUDR$]