The Consumer Price Index is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly changes in the CPI represent the rate of inflation. Why Investors Care
| Released on 7/18/07 For Jun 2007 | |||||||||||||||||||||||||
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Highlights
Consumer price inflation in June came in at a moderate pace for both the overall index and for core. The overall consumer price index in June slowed to a 0.2 percent increase, following a 0.7 percent surge in May. June's overall number was just above the consensus forecast for a 0.1 percent rise in the overall CPI. The core CPI inflation rate firmed slightly with a 0.2 percent increase in June, following a 0.1 percent rise in May. The consensus had expected a 0.2 percent increase in the core rate for the latest month.
Year-on-year, the overall CPI was unchanged at 2.7 percent in June. The core rate declined to up 2.2 percent on a year-on-year basis in June from up 2.3 percent in May.
Energy prices actually helped the overall CPI in June as most expected. In the non-expenditure category for energy, prices dipped 0.5 percent, following a 5.4 percent boost in May. Food price inflation accelerated to 0.5 percent in June from 0.3 percent in May.
The core rate picked up in June. On an unrounded basis, the core CPI rose 0.0.23244 percent in June, following a 0.14978 percent increase in May.
Today's report shows energy easing in June to pull the overall CPI back to a respectable pace while the core is remaining moderate. Both the bond and equity markets should like the numbers but will be waiting for Fed Chairman Bernanke's spin on the numbers later this morning during Congressional testimony.
The consumer price index was mixed in May as the overall consumer price index in May jumped 0.7 percent, following a 0.4 percent rise in April while the core CPI inflation rate eased with a 0.1 percent increase in May, following a 0.2 percent rise in April. Energy prices again boosted the overall CPI as energy prices increased 5.4 percent. It is going to be hard to see the core CPI repeat May's 0.1 percent rise given that it took declines in apparel, new & used motor vehicles, and transportation to soften it up.
CPI Consensus Forecast for June 07: +0.1 percent Range: -0.2 to +0.2 percent
CPI ex food & energy Consensus Forecast for June 07: +0.2 percent Range: +0.1 to +0.2 percent
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It is always a good idea to look at more than a few months of data to get a sense of changes in established trends. Monthly changes in the CPI are mainly volatile because of sharp fluctuations in food and energy prices. The core CPI eliminates the sharper fluctuations. |
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Yearly changes tend to smooth out more severe monthly fluctuations and give a better idea of the underlying rate of inflation. Even with the smoother trend, note that the core CPI does not fluctuate as much as the total CPI. |
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