Forex▼ Bearish
June CPI: Gas Drop Masks Sticky Core, Fed Chair Testifies
Headline CPI seen falling 0.2% in June as gasoline slides 15%. Core inflation holds near 2.9% with services accelerating. Fed's Warsh faces tough testimony.
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June CPI figures are due at 8:30 a.m. Eastern on Tuesday. Economists expect the consumer price index to have fallen 0.2% for the month, the first decline since the pandemic, according to MarketWatch. The drop is almost entirely a gasoline story. A gallon of regular gasoline slid about 15% between mid-May and the end of June.
The headline improvement looks less convincing beneath the surface. Core CPI, which strips out food and energy, is forecast to rise 0.2% in June. The annual core rate is seen slipping only to 2.8% from May's 2.9%, itself up sharply from 2.5% at the start of the year. Services inflation is the stubborn part. It covers rent, car repairs, recreation, dining out, and tickets, and is running at a 3.4% annual pace, up from 2.9% in January and well above the 2.6% average between 2010 and 2019. Some economists noted the World Cup may have given June services a temporary lift through higher demand for hotels, flights, meals, and tickets.