June CPI Preview
June Headline CPI is expected to increase 0.7% following a 0.6% increase in May, which would push the y-o-y figure to 4.5% from 4.2% in May. Core CPI in June is expected to match the May increase of 0.2%, which would leave the y-o-y reading unchanged at 2.3%.
Energy prices are once again expected to be the largest influence in the expected surge in June CPI. This relationship was clearly present in the higher-than-expected June PPI reading today — energy prices increased 6%, with gasoline prices up 9%.
Indeed, energy prices reached new record territory in June after May CPI reflected a 4.4% overall energy increase, along with a 5.7% rise in gasoline prices. Petroleum import prices increased 7.4% following an upwardly revised 8.9% increase in May and an upwardly revised 7.9% increase in April. Natural gas import prices, up 9.9% in June, rose for a 9th consecutive month.
Rising food prices also pose upside risk to June headline CPI as the ag-price index posted a 7% increase over the period. Food prices were up 0.3% in May CPI following a 0.9% increase in April. The June PPI report revealed a 1.5% increase in food prices following a 0.8% increase the previous month. Ag-export prices grew 2.2% in June following a 0.2% increase in May.
Core prices are expected to remain subdued, though there are upside risks from pipeline inflation pressures due to previous increases in the cost of food and energies.