- Prior was 8.3% y/y
- m/m reading +1.3% vs +1.1% expected and +1.0% prior
- CPI index at 296.311 vs 292.296 prior
- Full report
Core CPI:
- y/y 5.9% vs 5.7% expected and 6.0% prior
- m/m 0.7% vs +0.6% expected and +0.6% prior
Details:
- CPI energy +7.5% vs +3.9% prior
- Gasoline +11.2% vs +4.1% prior
- New vehicles +0.7% vs +1.0% prior
- Used vehicles +1.6% vs +1.8% m/m prior
- Owners' equivalent rent +0.6% m/m vs +0.6% prior
- Food +1.0% vs +1.2% prior
- Real weekly earnings -1.0% vs -0.7% m/m prior (revised to -0.9%)
Inflation is running hot. This is the highest reading since November 1981. The Fed funds futures market has quickly priced in a 23% chance of the Fed hiking 100 bps in two weeks.
The details are important here. The CPI energy index rose 7.5% in the month, contributing nearly half of the total increase. Energy is up 41.6% y/y. Given where gasoline prices currently are, those numbers will reverse in July.
Otherwise, the vehicle component is worrisome as it remains high and rents continue to creep up. I'd be a bit more dismissive of the report if it was more food-driven but there are a few components pushing it upwards. Used cars are particularly surprising because the Manheim used car index was lower in the month.
On headline shock alone, "above 9%" isn't pretty for main street and the Fed will have a hard time softening its stance.
