June CPI report is out. Overall CPI MoM rose 0.2% in June vs. 0.1% in May while the core CPI MoM rose 0.2% in June vs. 0.4% in May. Overall CPI YoY rose 3% in June vs. 4.0% in May, 4.9% in April and 5% in March. Core CPI YoY rose 4.8% in June vs. 5.3% in May, 5.5% in April and 5.6% in March. Overall CPI YoY increase of 3% is the smallest 12- month increase since the period ending March 2021.
Remember that a year ago, June 2022 CPI peaked at 9.1%. So this 3% CPI number for June has come a long way and 3% is a lot closer to the Fed’s 2% target. The core CPI MoM increase also slowed down to 0.2%, compared to 0.4-0.5% in the past 6 months. With the looming student loan payment restart, I believe we are going to see some further slowdown of consumer spending and hopefully we can keep the inflation in check without further Fed tightening. The current consensus is that the Fed will do another 0.25% hike in the July meeting but the September hike is probably off the table after today’s report.