WASHINGTON (MarketWatch)—The cost Americans pay for goods and services was little-changed in June, larger reflecting lower gasoline prices but also showing that a recent surge in inflation has crested.
The consumer-price index, or cost of living, was unchanged last month, the government said Friday. Economists polled by MarketWatch had forecast a 0.1% increase in CPI.
More important, the rate of inflation over the past 12 months slowed 1.6% in June from 1.9% in the prior month, and it is down from five-year high of 2.7% just five months ago.
Softer inflation has surprised the Federal Reserve and spawned renewed debate inside the bank about the timing of its next increase in a key short-term interest rate that influences the cost of borrowing.
Most senior Fed officials had believed the slowdown in inflation was temporary, but now they have been forced to reassess their views. Although the Fed had been expected to raise rates once more this year, a closely followed Wall Street forecasting site now puts the odds at close to zero.
U.S. futures showed a flat opening for the Dow Jones Industrial Average
Treasury yields fell.
Inside the report
In June, energy prices sank 1.6%. Americans paid less for gasoline, natural gas and electricity.
The cost of food leveled off in June after five straight increases.
Grocery prices have actually declined in the past year, but the cost of takeout and eating out has risen sharply, perhaps reflecting the impact of minimum wage increases in many states.
A stripped-down measure of inflation that excludes the volatile food and energy categories rose 0.1% in June.
The cost of household staples such as shelter and medical care both increased in June, though the prices of both aren’t rising as rapidly as they were earlier in the year.
Over the past 12 months the so-called core CPI is up 1.7%, unchanged from the prior month.
Adjusted for inflation, hourly wages for American workers advanced 0.2% in June. In the past year real hourly pay has risen just 0.8%, however.