Core consumer prices in the US rose by the most in a year and a half in June from May, data released on Thursday showed, though it is unlikely to deter market expectations for a rate cut by the Federal Reserve later this month.
Core consumer prices, which strip out volatile items like food and fuel prices, rose 0.3 per cent month-on-month — the biggest move since January 2018, the labour department said. On an annual basis, core CPI rose 2.1 per cent. That compared to economists expectations for a 0.2 and 2 per cent increase respectively, according to a Reuters survey.
The headline consumer price index rose 0.1 per cent in June from the previous month the labour department said. That topped expectations for CPI to remain flat. From a year ago, prices were up 1.6 per cent, which was in line with expectations.
The report showed prices were up broadly with gains in apparel prices, used motor vehicles, rent and medical care services.
The firmer June inflation figures come after Fed chair Jay Powell said in his Congressional testimony on Wednesday that there is a “risk that weak inflation will be even more persistent than we currently anticipate”.
Some measures of inflation have remained shy of the central bank’s 2 per cent target despite a low unemployment rate. But the firmer reading, following the better than expected June non-farm payroll report, could cloud the picture for Mr Powell, who on Wednesday cemented expectations of a rate cut at the central bank’s monetary policy meeting later this month, as he cited mounting risks to the US economic outlook.
US stock futures trimmed their gains while Treasury yields, which move inversely to price, climbed following the inflation figures.
A separate report showed the number of Americans filing for jobless benefits unexpectedly fell to 209,000 last week against expectations for a slight uptick to 223,000.