Consumer Prices Edge Slightly Higher

Subdued but still inching higher is the verdict on consumer prices which edged only 0.1 percent higher overall in June and 0.2 percent for the core (ex-food ex-energy). Year-on-year rates are up 1 tenth for each, at 2.9 percent overall which was expected and 2.3 percent for the core which is at the high end of expectations.

Medical care shows pressure with a 0.4 percent monthly gain with this yearly rate also up 1 tenth but to a still modest 2.5 percent. Vehicle prices rose sharply in June, up 0.4 percent for new cars and light trucks with used vehicles up 0.7 percent in the month.

Yet other readings are quiet especially housing which is unchanged in the month as a 3.7 percent decline in the away-from-home component offset an intrend 0.3 percent rise in owners' equivalent rent. Energy prices, which had jumped sharply in the prior two months, fell 0.3 percent which offset a 0.2 percent rise in food and are a major factor pulling down the overall reading.

Yesterday's producer price report did show signs of acceleration including for trade services and tariff-related metals, but pressure here isn't leading to, at least yet, pass through to the consumer. Today's report is very positive for Federal Reserve policy makers who are now trying to hold inflation steady.