US consumer prices were above expectations as energy prices rebounded, food prices rose further and core prices were moved up due to gains in sectors depressed during the COVID crisis. Other June data already released have reflected increased demand, but the resurgence of COVID cases could reverse this trend in July.
Data released by the Labor Department Tuesday morning showed that overall CPI rose by 0.6%, while core CPI, which excludes both food and energy prices, rose by 0.2%. Both were slightly above expectations and come after small declines in May. The Bureau of Labor Statistics again noted issues with data collection due to the need to social distance and reported that they were unable to calculate some index series as a result.
Energy prices jumped 5.1%, with gasoline prices up 12.3% as demand rebounded. Unadjusted energy prices were up 5.6%, with unadjusted gasoline prices up 10.0%, compared with seasonal adjustment expectations for smaller increases.
Food prices rose by 0.6% in the month, with food at home prices up 0.7% and food prices away from home up 0.5% as restaurant business picked up further in June.
Within the core, the relatively large owners’ equivalent rent category rose by 0.1% while lodging away from home prices rose by 1.2% and airline fares rose by 2.6% as consumers resumed some traveling. That trend may reverse if the current resurgence of COVID cases is not contained.
Apparel prices rose by 1.7% after sharp declines in the previous three months as demand suffered due to social distancing.
Overall CPI prices were up 0.6% from their year ago level, stronger than the 0.1% rate in May but well below the pre-COVID 1.5% rate in March. Prices excluding food and energy were up 1.2% year/year, unchanged from May and still well below the 2.1% rate in March.
In other data released Tuesday, the first look at July retail sales from Redbook was positive, up 3.0% from June as some consumers are preparing for a possible return to school. At the same time, interestingly, discount stores are still seeing brisk sales of masks and hand sanitiser. July sales were still down 5.5% from a year earlier.
The NFIB’s monthly Small Business Optimism index showed continued improvement in June, rising to a reading of 100.6 from 94.4 in May. While the index was above the 96.1 level expected, it was still below the pre-COVID reading of 104.5 in February.
There was a significant improvement in the outlook for retail sales to a net +13% in June from -24% in May due to further business re-openings, while the outlook for employment rose to +16% from +8% due to the Paycheck Protection Program.
The six-month outlook rose to a net +39% from +34%, with many respondents still seeing the recession as short-lived.