Inflation Cools in June

Overall and core inflation slowed in June, declining on a month-over-month basis and averaging just 3.0% growth over the past 12 months, according to the latest Consumer Price Index (CPI) from the Bureau of Labor Statistics. The June report was the first monthly decline in inflation since May 2020.

Core CPI increased by 3.3% over the past twelve months, following a 3.4% increase in May. The growth in core CPI is the slowest annual gain since April 2021.

However, despite the slowdown in the year-over-over increase in inflation, the NAHB says shelter costs continue to put upward pressure on inflation, accounting for over 60% of the total increase in core inflation.

“While this report indicates signs of softening prices, the Federal Reserve will require further data to confirm a consistent disinflation trend toward their 2% target before considering rate cuts,” NAHB senior economist Fan-Yu Kuo wrote in an analysis for the organization.

The CPI for gasoline fell 3.8% in June, “more than offsetting an increase in shelter,” according to the BLS. The index for shelter (+0.2%) was again the largest contributor to the monthly increase in the core CPI. Other top contributors included motor vehicle insurance (+0.9%), household furnishings and operations (+0.5%), and medical care (+0.2%).

The index for shelter makes up more than 40% of the core CPI, according to the NAHB. Indexes for owners’ equivalent rent (OER) and rent of primary residence (RPR) increased by 0.3%, the smallest such monthly increases since August 2021.