The inflation report issued yesterday showed inflation was very low for a second month. Core inflation was the lowest in 3½ years: 0.06% for June. (Core inflation is closest to the Fed’s favored measure of inflation, PCE, that will be reported for June at the end of this month.) I display a table and the same six graphs that I’ve use to follow the trends in inflation.
The two most widely-reported measures of inflation are Seasonally-adjusted inflation and Core inflation.
Seasonally-adjusted inflation declined this month. Inflation for the last two months is less than 0%. We have to go back four years to find two months lower than this. The rate over the last six months aims at an annual rate of 2.9%.
Core inflation excludes volatile energy and food components. This is similar to the measure favored by the Federal Reserve. Inflation increased by 0.06% in May. We have to go back more than three years to find a monthly change that was lower. The last six months aim at an annual rate of 3.7%. The last 12 have been at 3.3%.
Personal Consumption Expenditures (PCE) excluding Food and Energy is the measure of inflation that the Federal Reserve Board favors. The graph shows the data ending May; the data for June is issued at the end of this month. Inflation was 0.08% in May and the last six aim at an annual rate of 3.2%. 12-monrth inflation is 2.6%.
== History of 12-month inflation ==
Full-year inflation measured by CPI-U shows that inflation for the last 12 months has been slightly below 3.0%.
== Producer’s Price Index ==
The change in producer prices will impact consumer inflation. PPI for June increased 0.13%. PPI over the last six months is at a 4.4%. annual rate.
== Services ==
Inflation for services was 0.13% in June, the lowest in several years. The last six months aim at an annual rate of 4.9%.
Conclusion: Monthly inflation in June was less than 0.1%. This is a second month of very low inflation. We’d have to go back more than four years to find two months with this low of change. The last six months run at an annual rate near 3%.