Running The Numbers, Con't

June year-over-year inflation was the worst yet, with a 9.1% rise in prices over the last twelve months.

Shoppers paid sharply higher prices for a variety of goods in June as inflation kept its hold on a slowing U.S. economy, the Bureau of Labor Statistics reported Wednesday.

The consumer price index, a broad measure of everyday goods and services, soared 9.1% from a year ago, above the 8.8% Dow Jones estimate. That marked another month of the fastest pace for inflation going back to December 1981.

Excluding volatile food and energy prices, so-called core CPI increased 5.9%, compared to the 5.7% estimate.

On a monthly basis, headline CPI rose 1.3% and core CPI was up 0.7%, compared to respective estimates of 1.1% and 0.5%.

Taken together, the numbers seemed to counter the narrative that inflation may be peaking, as the gains were based across a variety of categories.

Energy prices surged 7.5% on the month and were up 41.6% on a 12-month basis. The food index increased 1%, while shelter costs, which make up about one-third of the CPI rose 0.6% for the month and were up 5.6% annually. This was the sixth straight month that food at home rose at least 1%.

Rental costs 0.8% in June, the largest monthly increase since April 1986, according to the BLS.

Stock market futures slumped following the data while government bond yields surged.

Much of inflation rise came from gasoline prices, which increased 11.2% on the month and just shy of 60% for the 12-month period. Electricity costs rose 1.7% and 13.7%, respectively. New and used vehicle prices posted respective gains of 0.7% and 1.6%.

Medical care costs increased 0.7% on the month, propelled by a 1.9% increase in dental services, the largest monthly change ever recorded for that sector in data that goes back to 1995.

Airline fares were one of the few areas seeing a decline, falling 1.8% in June though still up 34.1% from a year ago. The meat, poultry, fish and eggs category also fell 0.4% for the month but is up 11.7% on an annual basis.

 

The good news is that July numbers are already better, with a sharp drop in oil prices this month so far.  Oil is down $25 from its June highs of $120 a barrel, but that still means oil is $95 right now, and gasoline prices still remain remain high.  They are falling too, finally, with the national average down 40 cents from $5 average highs.

But we'll almost certainly see more major rate cuts in the weeks ahead, another three-quarter percent or even a full percent point is not out of the question.