CPI Commentary

July’s CPI report extended the moderation seen in June and provided further evidence that the inflation pressures that intensified earlier this year are beginning to ease.  Headline CPI rose 0.1% m/m in July, bringing the annual inflation rate to 3.4%, while core CPI, which excludes food and energy, increased 0.2% m/m and slowed to 2.5% y/y.

June’s CPI report provided a meaningful downside surprise and offered the first clear indication that the spring inflation acceleration may be easing.  Headline CPI declined 0.4% m/m in June, bringing the annual inflation rate down to 3.5%, below expectations for a 3.8% reading and down from 4.2% in May.

May CPI report confirmed that the Iran War’s energy shock has pushed headline inflation back above 4%, while the underlying core details were somewhat less concerning than the headline figure suggests.  Headline CPI rose 0.5% m/m and 4.3% y/y, up from 3.8% in April and the highest annual pace since April 2023. 

The April CPI report saw an expansion of the Iran War’s energy shock into broader goods categories and firmly set the headline CPI on its way to reach 4.0% in the second half of the year.  Headline CPI rose 0.6% m/m and 3.8% y/y in April, up from 3.3% in March, the highest annual pace since May 2023.

Headline CPI rose 0.9% m/m and 3.3% y/y in March, driven primarily by an energy shock tied to the Iran conflict.  Core CPI, however, increased just 0.2% m/m and 2.6% y/y, indicating that underlying inflation pressures remained relatively contained despite the surge in gasoline prices.

Headline CPI rose 0.3% m/m and 2.4% y/y in February, while core CPI increased 0.2% m/m and 2.5% y/y.