NEW YORK – Little change in the United States cost of living in June signals inflation may take even longer to reach the Federal Reserve’s goal, a Labor Department report showed Friday.
Highlights of national Consumer Price Index (June)
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Nationally, the consumer price index was unchanged in June (forecast was for 0.1 percent rise) following a 0.1 percent decline the prior month. From a year earlier, prices increased 1.6 percent, not seasonally adjusted, (forecast was 1.7 percent), the smallest advance since October, after a 1.9 percent gain.
Excluding food and energy, the so-called core CPI rose 0.1 percent for a third straight month (forecast was 0.2 percent); it increased 1.7 percent from June 2016. Smaller-than-forecast advance in core prices included drops in airfares, new and used vehicles, wireless phone services.
The New England CPI for all items also remained unchanged in June from May, seasonally adjusted.
Year-over-year New England Consumer Price Index highlights, not seasonally adjusted (June)
- CPI for all items in June for New England increased 1.5 percent.
- Housing CPI in New England increased 2.2 percent.
- Fuels and utilities rose 4.7 percent.
- Medical Care CPI in New England rose 1 percentage point less than the U.S city average at 1.7 percent year over year.
- Energy CPI in New England rose 4.2 percent, 1.9 percentage points higher than the U.S. city average.
- CPI for Apparel in New England rose 0.2 percent year over year.
Key Takeaways
Core consumer inflation last accelerated in January, on a year-over-year basis. In June, the smaller-than-forecast monthly advance reflected declines that extended beyond just a few categories. Household furnishings, clothing and hotel stays were also cheaper last month.
The report indicates inflation may remain stuck below the goal of Fed policy makers for a longer period of time, is a bit broader in scope and underscores concerns of some central bankers about additional rate increases.
The Fed’s preferred gauge of inflation, a separate figure based on what consumers purchase, has exceeded its 2 percent goal only once since April 2012, though some Fed officials focus on the measure excluding food and energy, which is still below their target.
Other Details
Energy prices fell 1.6 percent from previous month; food costs little changed The CPI for new vehicles fell 0.3 percent; air fares declined 2.7 percent Shelter costs rose 0.2 percent, with a 0.3 percent increase in owners-equivalent rent, one of the categories designed to track rental prices; price of lodging away from home dropped 1.9 percent Expenses for medical care rose 0.4 percent, most since August; these readings often vary from results for this category within the Fed’s preferred measure of inflation due to different methodologies The CPI is the broadest of three price gauges from the Labor Department because it includes all goods and services. About 60 percent of the index covers the prices that consumers pay for services ranging from medical visits to airline fares, movie tickets and rents.
Shobhana Chandra and Michelle Jamrisko are reporters for Bloomberg News. PBN contributed to this article.
