June 2018 Consumer Price Index

Prices continued rising for Americans in June according to the Bureau of Labor Statistics.  Their Consumer Price Index rose 0.1 percent, moderating from a rise of 0.2 percent in May.  Year-over-year, the headline tally accelerated marginally to 2.9 percent from 2.8 percent, but this uptick was enough to put the rate of change at its fastest pace since December 2011.  Stripping out food and energy, leaving the “core”- CPI, inflation rose 0.2 percent in the period and 2.3 during the prior year (fastest since February 2012).

Food and gasoline costs led the headline figure higher.  Food at home and away from home rose 0.2 percent in the period.  Gasoline costs rose 0.5 percent across the nation, but this was not enough to put a positive sign in front of the overall energy tally which declined 0.3 percent as electricity and natural gas costs fell.

Services added to the uptick as well.  Shelter costs rose 0.1 percent and are up 3.4 percent since June 2017.  Transportation costs increased 0.2 percent, climbing 3.7 percent during the prior twelve months.  Finally, medical services resumed their upward march, rising 0.5 percent to end the first half of 2018 after falling 0.1 percent in May and are up 2.5 percent in the past year.

As you can see in the illustration above, inflation is accelerating.  Trends for both the headline and core measures of CPI have upwardly sloping shapes which are steepening.  The Federal Reserve held rates low during times when inflation was underperforming and has mentioned that they will remain temporarily tolerant of inflation growing above their explicit target of two percent, keeping their pace of rate hikes moderate.  This should preserve the current economic environment we see as primed for additional growth in the months and quarters ahead.