In what is one of the very weakest 4-month stretch in 60 years of records, core consumer prices could manage only a 0.1 percent increase in June. This is the third straight 0.1 percent showing for the core (ex food & energy) that was preceded by the very rare 0.1 percent decline in March. Total prices were unchanged in the month with food neutral and energy down 1.6 percent.
Housing, which is a central category, continues to moderate, also coming in at 0.1 percent following a 0.2 percent gain in May. Apparel is down for a fourth month in a row with transportation, reflecting falling vehicle prices, down for a second month. Medical care, which had been moderating, picked up with a 0.4 percent gain while prescription drugs which Janet Yellen has been citing for special weakness, bounced back with a 1.0 percent gain. However wireless telephone services, another area cited by Yellen for weakness, posted another sizable decline, down 0.8 percent in June.
Year-on-year, the core is steady at 1.7 percent with total prices, which fluctuate much more than the core, down 3 tenths to 1.6 percent. The Fed may be blaming this stretch of weakness on special factors, but that argument is losing force.
Econoday's consensus is not calling for strength in consumer prices, at a monthly gain of only 0.1 percent in June vs a 0.1 percent decline in May. The yearly rate is seen falling back to 1.7 percent from 1.9 percent. Less food & energy, the rate is seen rising 0.2 percent vs May's gain of 0.1 percent with this closely watched yearly rate also called at 1.7 percent. Though this report has been tipped lower by declines in cell phone service plans and pharmaceuticals, fundamental costs like housing and medical care have also been slowing.