The June job reports released last week showed a slight decline in employment and a cool-off of the labor market. The labor market added 209,000 jobs in June, below economists’ expectations for a net gain of 225,000. It is considered the smallest monthly gain since a decline in December 2020.
The results of this report seem optimistic for the Federal Reserve as it seeks to reduce consumer demand, but not satisfactory enough to necessarily maintain the pause, let alone cutting interest rates.
The June CPI is expected to be released on July 12, 2023. The consensus forecast is for a 0.2% increase in the CPI from May, which would bring the annual rate of inflation to 4.1%. However, some factors could lead to a higher or lower reading.
One factor that could push the CPI higher is the recent increase in gasoline prices. The national average for a gallon of regular gasoline was $4.82 on July 7, 2023, up from $3.04 a year ago. If gasoline prices continue to rise, it could push up the cost of transportation and other goods and services.
Another factor that could impact the CPI is the recent decline in used car prices. Used car prices have fallen sharply in recent months, due to a combination of factors, including the chip shortage and the easing of supply chain disruptions. This could help to offset some of the upward pressure on inflation from other areas.
The forthcoming CPI could be impactful on a number of factors. First, it could be impactful on the cost of food. Food prices have been rising steadily in recent months, and this trend is expected to continue in June. Second, energy prices have also been rising, and this could put upward pressure on the CPI. Third, shelter costs are a major component of the CPI, and they are expected to rise in June. And Fourth, transportation costs are also expected to rise in June, due to higher gasoline prices.
Overall, the June CPI is expected to be higher than the May reading, but it is possible that the increase could be smaller than expected. The release of the CPI will be closely watched by economists and investors, as it will provide an important update on the state of inflation in the United States.
It is, however, unlikely that the June CPI report will change the Fed’s interest rate trajectory, barring a huge upside or downside surprise, especially considering that Fed officials in recent weeks have been vocal that more rate hikes are likely coming.