June 17, 2024

Bond Friendly Inflation News

The May Consumer Price Index (CPI) showed no overall inflation, better than the expected 0.1% rise. Year-over-year inflation dropped from 3.4% to 3.3%, also below predictions. This drop was helped by a 2% decrease in energy prices, with gasoline down 3.6%.

Core CPI, which excludes food and energy, went up by 0.2%, slightly less than expected. Year-over-year, Core CPI fell from 3.6% to 3.4%. Most of this inflation came from shelter and motor vehicle insurance, with other items rising only 0.21%.

The Producer Price Index (PPI), showing wholesale inflation, fell by 0.2%, compared to an expected 0.1% rise. Year-over-year, it went down from 2.3% to 2.2%, again lower than expected. Gasoline price drops contributed to this decrease.

Core PPI, excluding food and energy, was flat at 0% in May, much lower than the 0.3% expected. Year-over-year, Core PPI dropped from 2.4% to 2.3%. Most inflation came from services, which stayed at 0%.
This PPI report is positive and aligns with the softer CPI report. PPI shares similarities with the Fed’s preferred inflation measure, PCE (Personal Consumption Expenditures), suggesting a favorable outlook. PCE estimates have been lowered from 0.23% to 0.1%, and may drop further after considering PPI data.


By: Jon Iacono
A Family

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