Key facts
- The Bureau of Labor Statistics is set to release the June CPI report at 8:30 am ET.
- Economists anticipate headline inflation to cool to 3.8% year-over-year in June.
- Core CPI, excluding volatile food and energy prices, is projected to be around 2.8%.
- Inflation has been outpacing wage growth, impacting household budgets.
- The Federal Reserve will use this data to inform its upcoming interest rate decision.
The Bureau of Labor Statistics is scheduled to release the Consumer Price Index (CPI) report for June today at 8:30 am ET. Forecasters anticipate that headline inflation will show a deceleration, cooling to an expected 3.8% year-over-year increase, a notable decrease from May's 4.2% rise. This expected slowdown is largely attributed to the dissipating effects of oil price shocks, though recent upticks in gas prices may not be fully captured in this backward-looking report.
Core CPI inflation, which excludes the more volatile food and energy components, is projected to remain relatively stable, with an expected year-over-year increase of 2.8%, similar to May's 2.9%. Economists note that inflation continues to outpace wage growth, with June's nominal wage increase expected to be around 3.5% year-over-year. This disparity puts pressure on the budgets of lower- and middle-income households.
Food prices, a significant budget item for many, have also seen varied inflation trends. While food away from home inflation has been cooling, food at home prices have shown a slight uptick. Experts highlight that price volatility in necessities like food and gas makes budgeting challenging.
The Federal Reserve's Federal Open Market Committee will closely examine this inflation data, alongside recent labor market figures, to inform its interest rate decision at the end of July. Market activity suggests a roughly 60% chance of the Fed holding rates steady. Analysts suggest that slowing inflation might encourage the Fed to maintain its wait-and-see approach, especially as price growth remains above the central bank's 2% target. The labor market data, which showed slower job growth and a drop in participation, also provides context for the Fed's monetary policy considerations.