Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  The Consumer Price Index Increased 0.2% in June
Posted Under: CPI • Data Watch • Inflation

 

Implications:  Fed officials, take note, inflation is on the rise.  The consumer price index rose 0.2% in June, but more importantly the pace of inflation has been steadily on the rise. While up a modest 1.0% in the past year, consumer prices have risen at a 1.6% annualized in the past six months and at a 3.4% annual rate in the past three months.  Energy prices rose 1.3%, as rising prices for gasoline and fuel oil more than offset declining electricity costs.  Excluding energy, consumer prices are up 2.0% in the past year, which means that as energy prices rise, the headline index will follow at a faster pace than many are expecting.  Food prices fell 0.1% in June, led lower by declining costs for meats and dairy products, but "core" consumer prices, which exclude the volatile food and energy components, rose 0.2% in June and show annualized readings above 2% over the past three-, six-, and twelve-month periods.  While the Fed continues to kick the can down the road, this consistent pace of "core" inflation around 2% – paired with continued employment gains and a clear acceleration in the headline consumer price index – shows the economy is ready for the next rate hike.  The increase in the core CPI in June was led by housing rents, medical care and education.  Owners' equivalent rent, which makes up about ¼ of the CPI, rose 0.3% in June, is up 3.2% in the past year, and will be a key source of higher inflation in the year ahead.  One negative piece of news in today's report is that "real" (inflation-adjusted) average hourly earnings declined 0.2% in June.  However real wages are up 1.5% in the past year and we think wages will rise faster than prices in the year ahead as employment continues to grow at a healthy clip.  Consumers are ready, the economy is ready, and the data shows that a "data dependent" Fed should be ready to make monetary policy a little less loose.

Click here for PDF version


Posted on Friday, July 15, 2016 @ 11:46 AM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2020 All rights reserved.