Keeping you up to date on the latest data releases.
The headline CPI was virtually flat in June, rising at an annualized rate of just 0.5 percent in July, as falling energy prices offset increases elsewhere in the marketbasket. The year-over-year growth rate in the headline CPI remained at 1.7 percent in June. Food prices rose 2.1 percent during the month, and we have yet to see any effects from spiking corn prices (cereal and bakery products fell 4.9 percent in June). Excluding food and energy prices, the “core” CPI rose 2.5 percent in June, in line with its near-term (three-month annualized) growth rate of 2.6 percent, and ran slightly ahead of its longer-term (12-month) growth rate of 2.2 percent. Our underlying inflation measures—the median and 16 percent trimmed-mean CPI—came in softer than the core CPI in June, rising 1.5 percent and 1.9 percent, respectively. On a year-over-year basis, the median is up 2.3 percent and the trim is up 2.2 percent. The disagreement in June between the core CPI and our trimmed-means is due to the influence of a few relatively large categories on the core CPI. The first was a huge price spike in medical care services prices, jumping up 9.1 percent in June which is its largest price increase since May 1993. The series (which comprises roughly 5 percent of the marketbasket) is now up 4.3 percent on a year-over-year basis. Our trimmed-mean measures treated this unusually large price spike as noise, excluding it from the calculation in June, whereas it was included in the core CPI calculation. A couple of other sizeable components were excluded from the trim in June: lodging away from home (up 11.2 percent) and footwear (up 14.1 percent). Most of the components excluded from the trim on the other side of the distribution were food and energy items (except for a 20 percent drop in public transportation prices, but that was likely related to the drop in fuel prices). This exacerbated the difference between the core CPI and median.