CPI Holds Steady in June

For the second time in three months, the Consumer Price Index for All Urban Consumers (CPI-U) remained unchanged from the prior month’s reading. Once again, energy prices weighed on topline CPI as the energy index fell for the third month in a row, contracting 1.4% from May 2012 and 3.9% versus June 2011. Gasoline prices fell throughout the month of June, closing out the final week of the month around a national average of $3.42 across all grades. The index for natural gas offset the drop in gasoline by posting a 1.7% increase in June. The downward pressure on the overall price level caused by gasoline prices will likely slow or even possibly come to an end over the near term, as prices at the pump and wellhead have risen appreciably over the past several weeks.

Core CPI, a measure that excludes volatile food and energy prices, increased 0.2 percent month-to-month in June. This marks the fourth consecutive month the core CPI has advanced at this rate and the index has increased at an average monthly rate of approximately 0.2% since the beginning of 2011. On a year-over-year basis, core CPI registered a 2.2% rate of growth, slowing slightly from the 2.3% rate observed the previous four months, but still above the 1.9% average annualized rate of increase seen over past decade.

The shelter index, which is used as a measure of housing costs, continued to rise steadily in June as it increased 0.1% from the previous month and 2.2% on a year-over-year basis. In terms of rental housing, NAHB constructs an inflation-adjusted measure of rental rates from the CPI for rent of primary residences and overall CPI. The real rent index increased for the third month in a row and is approximately 1% above its June 2011 level.



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