Lower fuel prices have driven U.S. consumer inflation lower again in June. Consumer price index (CPI) figures released by the Bureau of Labor Statistics indicated prices were stable over the month, missing market expectations of a 0.1% increase. On a 12-month basis the CPI growth rate dropped again, this time from 1.9% in May to 1.6%.
Core prices, a measure of prices which strips out food and energy price changes, rose by +0.1% for a third month in a row. The figures were under the expected 0.2% rise, which meant annualised core inflation slipped a little lower, although it remained at 1.7% (seasonally adjusted) after rounding. So far, the annualised figure has dropped each month this calendar year.
The low inflation figures prompted some speculation of a delay of the Fed’s next rate rise. CPI inflation is not the U.S. Fed’s preferred measure of inflation, but core CPI does tend to track core PCE growth (which is the Fed’s preferred measure). Any fall in consumer inflation is therefore viewed as an indicator of a potential fall in core PCE growth.