US consumer prices rose modestly in June

US consumer prices rose modestly in June

US consumer prices rose modestly in June

Rating agency India Ratings (Ind-Ra) on Thursday said that the latest Index of Industrial Production (IIP) and consumer price index (CPI) data indicate that the challenges for the economy are still very much intact.

Economists had forecast the CPI gaining 0.3 per cent last month and advancing 1.1 per cent from a year ago.

The Federal Reserve has a 2 percent inflation target and tracks an inflation measure which is now at 1.6 percent.

Within the core CPI basket, housing and medical costs continued to march higher. In the 12 months through June, the CPI advanced 1.0 per cent, matching May's increase. "Rains over the rest of July will be critical in determining the trajectory of food inflation", it added. Energy prices rose 1.3 per cent, including a 3.3 per cent increase in gasoline prices. Medical care costs increased 0.4 per cent after advancing 0.3 per cent in May. We expect core inflation to hold steady for the remainder of the year, but for rising energy prices to help lift headline inflation to 2% by the beginning of next year.

Core consumer prices, which exclude food and energy, also rose 0.2%.

The cost for services excluding rents climbed just 0.1 percent in June, the smallest gain since January.

Real or inflation-adjusted hourly wages, meanwhile, fell 0.2% in June to mark the second drop in three months.

The largest upward impacts on annual inflation were registered in the Restaurants and Hotels Index (0.53 percentage points), the Food and Non-alcoholic Beverages Index (0.32 percentage points) and the Furniture, Household Equipment and Routine Maintenance of the House Index (0.16 percentage points). The cost of used cars and trucks tumbled 1.1 per cent. Prices for new motor vehicles slipped 0.2 per cent.

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