United States: Inflation unchanged amid declining gasoline prices
July 15, 2011
In June, consumer prices dropped a seasonally adjusted 0.2% over the previous month, which contrasted the 0.2% price increase tallied in May but matched market expectations. The monthly price drop was driven by lower energy prices, mainly led by an extraordinary 6.8% month-on-month decline in gasoline prices as well as a 1.6% price drop in electricity. Owing to the subdued monthly print, annual inflation remained unchanged at 3.6%, which marked the first pause after rising uninterruptedly since December. At the current level, inflation remains at the highest level since October 2008. Meanwhile, the closely monitored core inflation index, which excludes food and energy, mirrored the previous month's increase and added 0.3% over May, driving annual core inflation up a notch to 1.6%. The Fed anticipates PCE inflation (based on the price index for personal consumption expenditures) to average between 2.1% and 2.8% in 2011 and between 1.2% and 2.0% in 2012.