The U.S. Department of Labor has been showing that some deflationary pressure may be going away. Consumer inflation, measured by the Consumer Price Index (CPI), posted a gain of 0.3% in the month of June. Bloomberg was calling for a gain of 0.3% on the headline inflation reading.
Core CPI, which excludes food and energy, rose by 0.2%. That matched the 0.2% expected by Bloomberg.
Where inflation pressure gets tricky to analyze is on the year-over-year comparison. The headline CPI was up only 0.1% from a year ago, but if you back out food and energy, that year-over-year change was up 1.8%.
One of the key drivers in June was that gasoline prices at the pump were up by 3.4% in June — and that was after a gain of just over 10% in May. Gas prices were down just over 23% year over year. Whether that recent tick up in the price is sustainable and will remain high ahead is another question, since oil prices fell from $60 at the end of June to almost $50 of late.
Food prices were up 0.3% in June, but that avian flu sent egg prices up over 18% in June.
How does all of this play out in the grand scheme of things? Note that inflation remains well under the Federal Reserve’s 2.0% to 2.5% mandate. Still, Fed Chair Yellen and the Fed presidents are likely to hike interest rates later this year, as long as Greece and China do not sink the ship.
ALSO READ: Why the Fed May Be Losing Its Window to Raise Interest Rates
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