June’s CPI will be out tomorrow. Bloomberg is showing consensus estimates of up 1.1% m/m (8.8% y/y) for the headline and 0.6% m/m (5.8% y/y) for the core inflation rates. Both y/y estimates are up from May’s rates of 8.6% and 6.0%.
Surprises are likely to be on the upside for the headline rate, led by last month’s jump in gasoline prices, while the core might be slimmed down by weaker used car prices (charts below). We expect to see moderation in other consumer durables prices, especially housing-related ones such as appliances and furniture, reflecting the downturn in home sales. Inflationary pressures are likely to remain high in services, including rent and airline fares.
In any event, S&P GSCI commodity price indexes are showing significant declines so far during July, especially for agricultural commodities but also for energy prices. (The price of crude oil is down more than 7% today.) These developments should moderate the headline inflation rate in July’s CPI.
