June 2015 Consumer Prices

Americans paid more for goods and services in June 2015 according to the Bureau of Labor Statistics’ Consumer Price Index (CPI).  Overall prices rose 0.3 percent in the period, a slight slowdown from the 0.4 percent uptick a month earlier.  This measure of inflation has increased in each of the last five months after declining in October through January.  Year-over-year, prices have increased just 0.1 percent versus being unchanged in May; this is the first 12-month increase since December!

Many essential items were more expensive in the period.  Energy, shelter, and food all contributed to the uptick.  Three out of the four components of the energy segment (gasoline, electricity, and natural gas) increase during June; only fuel oil was lower.  However, the energy index is still 15.0 percent lower than a year ago. Shelter increased 0.3 percent in June.   Food costs jumped the most since September 2014, partly due to a sharp increase in the price of eggs.

Core inflation remained in line with its recent trend.  This price measure, which excludes food and energy, increased 0.2 percent in June, matching its six month average.  The earlier mentioned increase in shelter accounted for over two-thirds of the increase in core CPI.  Over the last year, core CPI increased 1.8 percent.

At first glance, the year-over-year core CPI figure looks to be getting close to the Federal Reserve’s target of 2.0 percent.  However, the 12-month change has remained in a range of 1.6 percent and 2.0 percent since August of 2012.  The jury is still out on whether or not inflation is taking hold, so the hawks may not be able to use their talons just yet.         (by C. Cox)