U.S.: Consumer prices rose in June, as COVID-related discounting rolled off - TD Bank Financial Group

According to ActionForex, analysts at TD Bank Financial Group note that consumer prices rose 0.6% month/month in June, recording the first increase since COVID-19 hit, and were up 0.6% year/year, accelerating from only 0.1% in May.

"Energy prices increased for the first time in six months, up 5.1% in June. The price of gasoline rose 12.3% m/m, but remained 23.4% below year-ago levels. In contrast, food prices were up 4.5% versus a year ago, after another hearty increase in June (+0.6% m/m). Beef prices increased again last month (+4.8% m/m), and have risen 20.4% over the past three months alone."

"After three consecutive months of declines, core prices rose 0.2% m/m in June. As a result, core inflation was 1.2% on a year/year basis, matching May’s pace."

"After significant discounting earlier in the pandemic, prices for many categories rebounded in June. Leading the way was motor vehicle insurance prices, up +5.1% m/m. Apparel prices also bounced back (1.7% m/m). On the services side, core services prices were up a solid 0.3% m/m, driven in large part by a 0.5% increase in medical services costs. Medical services inflation is now up 6.0% year/year, the fastest rate of inflation since the early 1990s. Many aspects of medical care have seen prices accelerate in recent months, but the most dramatic is health insurance costs, which are up almost 20% over the past year. Prices also rebounded for airline fares (+2.6% m/m) and car and truck rentals (+17.5%)."

"Some price weakness did persist in June, with prices for used vehicles continuing to fall (-1.2% m/m). Recreation prices were also lower (-0.6% m/m), as were communication (-0.3% m/m), while new vehicles prices remained unchanged. Inflation pressures for shelter have also cooled a bit, with rent of primary residence up a modest 0.1% m/m, the softest pace since 2011. Owner’s equivalent rent was also up only 0.1% on the month."