US June CPI Increase Rate 3.0%... Lowest in Over 2 Years (Update)

Core CPI also rises 0.2% MoM... Smallest increase since August 2021
"'Expected rate hike' unlikely to change this month's FOMC outcome"

The June Consumer Price Index (CPI), which can gauge the level of inflation in the United States, showed the smallest increase in over two years, indicating that inflation has slowed more than Wall Street had expected.

Supermarket in California
Photo by AFP Yonhap News

The U.S. Department of Labor announced on the 12th (local time) that the June CPI rose 3.0% compared to the same month last year. This was below Wall Street's forecast of 3.1%, marking the lowest level since March 2021. The CPI increase rate fell below 4% for the first time since April 2021.

On a month-to-month basis, it recorded a 0.2% increase, also below the Wall Street forecast of 0.3%.

The core CPI, which excludes the volatile energy and food sectors, rose 4.8% year-over-year, lower than the market expectation of 5.0%. It increased by 0.2% compared to the previous month. The month-to-month core CPI increase rate was the smallest since August 2021.

With both the CPI and core CPI showing a slowdown in their upward trends, expectations are emerging that the U.S. Federal Reserve's tightening stance may change.

There are four remaining scheduled Federal Open Market Committee (FOMC) meetings this year: on June 25-26, September, November, and December. While a 0.25 percentage point rate hike is highly likely at this month's FOMC, opinions are divided on what decisions will be made at the September and November meetings.

Market experts generally believe that it will be difficult to prevent a rate hike at this month's FOMC based on the CPI results. The Wall Street Journal (WSJ) stated, "Although the CPI increase rate is the lowest in over two years, it still exceeds the Fed's target of 2%, making it unlikely that the expected rate hike at this month's FOMC will be reversed."

However, the market is interpreting the CPI increase rate, which was below Wall Street's expectations, positively. U.S. stock futures rose before the New York Stock Exchange opened.

Betsy Stevenson, a professor at the University of Michigan, told CNBC, "What this CPI report confirms is that this situation is a game that requires patience," adding, "But we are confirming that it is still going down. It looks like a soft landing."

This content was produced with the assistance of AI translation services.