CPI Jumps On Food, Energy, Apparel, Medical Care Costs

For those who don't eat or use energy: feel free to stop reading now - your inflation came in just as expected, at 0.2% up from May, and 1.6% higher compared to a year ago. However, those unlucky few who are forced to eat, use and A/C and/or commute, your inflation just saw its biggest monthly hedonically-adjusted jump (don't forget the deflationary impact of that 80 inch LCD TV you have zero intention of buying), or 0.5%, since February's 0.7% and well above the 0.3% expected.

This was driven by a 6.3% surge in gasoline prices, and a nat gas price index soaring 11.7% leading to a 3.4% increase in Energy prices, even as the Food increase of 0.2%, tied for the highest since December 2012 was subdued. And while non-food and energy components did not see major spikes, June apparel prices jumped 0.9%, the highest since 2012, as did Medical Care Commodities and Services, rising 0.5% and 0.4% respectively, both posting the highest M/M jump since well into 2012. 

The breakdown by component from the BLS:

Food

The food index increased 0.2 percent in June after declining 0.1 percent in May. The food at home index, which fell 0.3 percent in May, increased 0.2 percent in June. Four of the six major grocery store food group indexes posted increases. The indexes for cereals and bakery products and for meats, poultry, fish, and eggs both increased 0.4 percent. The indexes for nonalcoholic beverages and for other food at home each increased 0.2 percent in June after declining in May. In contrast to these increases, the indexes for fruits and vegetables and for dairy and related products both declined slightly in June, falling 0.1 percent. Over the last 12 months, the index for food at home has risen 0.9 percent, with all the major food group indexes increasing except nonalcoholic beverages, which declined 0.9 percent. The index for food away from home rose 0.2 percent in June, the same increase as in May, and has increased 2.2 percent over the last 12 months.

Energy

The energy index rose 3.4 percent in June after increasing 0.4 percent in May. The gasoline index, which was unchanged in May, rose 6.3 percent in June and accounted for almost all of the energy increase. (Before seasonal adjustment, gasoline prices rose 0.6 percent in June.) The electricity index also increased in June, rising 0.2 percent. However, the fuel oil index fell 0.5 percent, its fourth consecutive decline, and the index for natural gas decreased 0.4 percent, ending a streak of four consecutive increases. All the major energy component indexes have increased over the past 12 months. The index for natural gas rose 11.7 percent while the gasoline index increased 2.8 percent. The indexes for electricity and fuel oil rose more modestly, increasing 1.9 percent and 1.8 percent, respectively.

All items less food and energy

The index for all items less food and energy increased 0.2 percent in June. The shelter index, which rose 0.3 percent in May, increased 0.2 percent in June. The indexes for rent and owners’ equivalent rent both increased 0.2 percent. The index for medical care, which declined in May, increased 0.4 percent in June, its largest increase since last July. The index for medical care commodities, which declined 0.5 percent in May, rose 0.5 percent in June as the prescription drug index turned up. The index for medical care services rose 0.4 percent in June after being unchanged in May. The apparel index increased 0.9 percent in June, its largest increase since August 2011. The index for new vehicles, unchanged in May, rose 0.3 percent in June. The indexes for household furnishings and operations, personal care, and tobacco also increased in June. In contrast to these increases, the index for airline fares declined in June, falling 1.7 percent after rising 2.2 percent in May. The index for used cars and trucks fell for the second month in a row, declining 0.4 percent. The recreation index also declined, falling 0.1 percent.

The index for all items less food and energy increased 1.6 percent for the 12 months ending June. The shelter index increased 2.3 percent over that span, the index for medical care rose 2.1 percent, and the new vehicles index rose 1.2 percent. The index for used cars and trucks was one of the few to decline
over the last 12 months, falling 2.3 percent.