|
After rising for three consecutive months, the consumer price index fell in June. The annual inflation rate was 4.2% in May, down to 3.5% last month.
It helped that gas prices fell nearly 10%, as the Iran war waned, temporarily. But some of that’s been reversed already now that the U.S. and Iran are trading strikes again.
The core inflation rate, which excludes volatile food and energy prices, fell to 2.6% year-over-year, tantalizingly close to the Federal Reserve’s 2% target.
Economists and policymakers have been worried about the recent resurgence in inflation. So there was a lot to like in this report, like deceleration across both goods and services.
Gargi Chaudhuri at BlackRock pointed in particular to services where prices could have spiked thanks to World Cup tourism.
“Airfares, lodging away from home, food away from home — that would have a little bit of the World Cup flavor to them, if you will — they haven’t generated a meaningful inflationary impulse,” he said.
Now, what the Fed might make of this report as it plots future interest rate policy to fight inflation is up for debate.
In the dovish, glass half-full camp is Jay Hatfield at Infrastructure Capital Advisors. He pointed out that one big component of inflation — rent — is basically flat now.
“The report was very positive for future inflation. Hopefully put the Fed back on track to hold rates for now and then cut when energy prices come down when the Strait reopens,” he said. | 
