📈 John's Finance Corner: Consumer Inflation Rises in June, But Tariff Impacts Remain Limited
Last week’s Consumer Price Index (CPI) report for June revealed a modest uptick in inflation, with prices rising 0.3% month-over-month and 2.7% compared to a year ago. This marks a slight increase from May’s 2.4% annual rate, driven primarily by higher energy costs and a modest rise in food prices.
🔍 Key Highlights from the CPI Report
- Headline CPI:
- Up 0.3% in June
- Annual rate rose to 2.7% from 2.4% in May
- Energy Prices:
- Jumped 0.9%, contributing significantly to the monthly increase
- Food Prices:
- Rose 0.3%, showing only a modest impact
- Core CPI (excluding food and energy):
- Increased 0.2% in June
- Annual rate edged up to 2.9% from 2.8%
Both headline and core inflation came in just below market expectations. It’s worth noting that part of the annual increase reflects the replacement of lower June 2024 figures with higher 2025 data in the 12-month average—a statistical nuance that can amplify perceived inflation.
🛃 Tariffs: Less Impact Than Anticipated
Despite concerns that tariffs announced in April would drive prices higher, their effect has been relatively muted. While some categories like home furnishings and clothing saw price increases, others—such as car prices—declined, and food costs rose only slightly. This suggests that supply chains and consumer demand may be absorbing some of the pressure.
🏭 Wholesale Inflation Holds Steady
June’s Producer Price Index (PPI) showed inflation at the wholesale level remained flat, following an upwardly revised 0.3% increase in May. On a yearly basis, wholesale inflation slowed to 2.3%, down from 2.7%—the lowest level since September.
🔍 PPI Breakdown
- Headline PPI:
- Flat in June
- Annual rate eased to 2.3% from 2.7%
- Core PPI (excluding food and energy):
- Also flat
- Annual rate declined to 2.6% from 3.2%
While some tariff-related price increases appeared in the report, they were not widespread. Categories like healthcare and airline travel saw little to no inflation, helping to keep the overall report better than expected.
This matters because PPI influences the Fed’s preferred inflation gauge—the Personal Consumption Expenditures (PCE) index. With the next PCE report due July 31st, the muted PPI data suggests we may not see a sharp rise in consumer inflation.
🏡 What to Watch This Week: Housing & Labor Data
Looking ahead, several key reports could influence market sentiment and mortgage rates:
- Wednesday: Existing Home Sales for June
- Thursday: New Home Sales and Weekly Jobless Claims
Mortgage rates tend to follow the 10-year Treasury yield, which has been volatile but started the week on a positive note. If economic data continues to surprise to the upside, we could see yields—and mortgage rates—trend downward, offering some relief to the housing market.
John Lamberg
MORTGAGE LOAN ORIGINATOR
NMLS 189233
