CPI -1.4% YOY To June, Core CPI +1.7% YOY To June, Inflation Fears On Again.

The US Consumer Price Index, which measures inflation at the consumer level of the economy, was +0.7% in June and -1.4% year-over-year through June. Excluding volatile oil and food costs from the readings, “Core” CPI for June was +0.2% and +1.7% YOY through June. You can view and download historical CPI data by scrolling down to our Data section on the right side of the site.

Inflation is within the Fed’s comfort zone of 1-2% but it was hotter than anticipated. As we mentioned yesterday with the PPI reading measuring inflation at the manufacturing level of the economy, since February, when deflation concerns were driving markets, we’ve see-sawed each month from economic weakness to inflation fears, which cause rates to fall and rise respectively. Rates are tied to bond trading and bonds don’t like inflation so they sell off on inflation fears, pushing price down and yield (or rate) up. Much of the inflation concern stems from rising oil prices leading into and during the summer driving season and in a longer-term sense, many market participants feel inflation is the ultimate effect of massive government stimulus. Conversely, market traders think inflation shouldn’t be an issue for some time because aggregate demand is compromised by weakened consumers and businesses. But bond markets still sell off on a report like today’s, showing hotter inflation.