Consumer Price Index Inches Higher

Consumer prices are moving incrementally higher in results for May that hit Econoday's consensus across all four readings: up a monthly 0.2 percent both overall and for the core with year-on-year rates up 3 tenths overall to 2.8 percent and the core up 1 tenth to 2.2 percent.

Gasoline jumped 1.7 percent in the month outside of which most other readings are modest-to-moderate. Rent rose 0.3 percent in the month as did owners' equivalent rent while medical care, outside of a spike for related commodities and hospital services, remains largely flat. New vehicle prices, up 0.3 percent, are showing some pressure with car insurance showing continuing pressure at a 0.4 percent gain. But there are plenty of soft spots including a 1.9 percent decline for airfares, no change for apparel, and a 0.9 percent drop in used car prices.

Though the 2.2 percent yearly rate for the core is moderate, it is the highest rate since February last year. What counts most here is the upward trajectory which points to a continued climb to 2 percent for core PCE prices which, at 1.8 percent in both April and March, are on a convincing approach to the Federal Reserve's 2 percent goal. Today's data, though moderate, will confirm expectations for a rate hike at this week's FOMC.