US Inflation Rate Falls To 8-Month Low Of 1.6%


Consumer prices in the United States increased 1.6 percent year-on-year in June of 2017, below 1.9 percent in May and compared to market expectations of 1.7 percent. It is the lowest inflation rate since October of 2016 due to a 0.4 percent fall in gasoline prices. On a monthly basis, consumer prices were flat, following a 0.1 percent drop in May and compared to forecasts of 0.1 percent.

Year-on-year, energy prices rose 2.3 percent, lower than 5.4 percent in April. In addition, inflation slowed for services less energy (2.5 percent from 2.6 percent in May), new vehicles (0 percent from 0.3 percent) and medical care commodities (3.2 percent from 3.3 percent). Prices continued to fall for used cars and trucks (-4.3 percent, the same as in May) and apparel (-0.7 percent from -0.9 percent). In contrast, inflation was steady for shelter (3.3 percent), medical care (2.5 percent from 3.1 percent) and food (0.9 percent) and increased for transportation services (3.1 percent from 2.9 percent). 

Core inflation rate which excludes prices of food and energy remained at a two-year low of 1.7 percent in June of 2017, the same as in May and in line with market expectations. 

On a monthly basis, consumer prices were flat, following a 0.1 percent drop in May and compared to market expectations of a 0.1 percent gain. Energy prices fell 1.6 percent, offsetting a 0.1 percent increase in the index for all items less food and energy. All the major energy components declined, with gasoline falling 2.8 percent. Food cost was unchanged in June, with the index for food at home declining slightly as five of the six major grocery store food group indexes decreased.  

Excluding food and energy, shelter, medical care, motor vehicle insurance, education, and personal care increased. On the other hand, cost declined for airline fares, used cars and trucks, wireless, telephone services and new vehicles.

BLS | Joana Taborda | joana.taborda@tradingeconomics.com
7/14/2017 1:05:03 PM