1. INFLATION
• The consumer price index (CPI) rose by 0.2% month-over-month and 3.0% year-over-year through June,
according to the latest numbers from the Bureau of Labor Statistics. June’s monthly pace was a slightly
uptick from May, but inflation continued to trend down on an annual basis.
• Shelter remains the largest contributor to month-over-month price increases, accounting for roughly
70% of the increase. Food prices rose 0.1% in June, 10 basis points below the previous month’s rate—this
was mostly driven by the ‘food away from home’ index, which rose 0.4% in June, while food at home saw
no change. Energy prices rose 0.6% in June but have fallen -16.7% over the past 12 months.
• Excluding food and energy, core inflation also rose 0.2% in June, but was the smallest 1-month increase
in core prices since the summer of 2021. Since core-inflation is more consequential in central bank
policymaking, the core-CPI’s two-year low represents a significant milestone.
2. CONSUMER INFLATION EXPECTATIONS
• Inflation expectations by US consumers for the next 12 months fell for the third consecutive month in
June to 3.8%, its lowest since April 2021, according to the New York Fed.
• Consumer inflation expectations have gradually fallen from a June 2022 high of 6.8%, and June’s downtick
follows a year-ahead expectation of 4.1% in May.
• Expected price changes for gas declined 40 basis points to 4.7%. Expected price changes for food fell
10 basis points to 5.3%.
• Several other sub-components saw a modest rise in year-ahead expected price changes. For college
education, inflation expectations rose 1.2 percentage points to 8.3%, expected price changes for medical
services rose by 10 basis points to 9.3%, and expected price changes for rent rose 30 basis points to
9.4%. Similarly, home price growth expectations rose for the fifth consecutive month to 2.9%, its highest
reading since July of 2022.
• The median three-year-ahead inflation expectation remained unchanged at 3% but rose for the five-year
horizon, jumping 30 basis points to 3%, its highest reading since March 2022.
