Today, we are visited by one of the PI brothers, and wish a happy birthday to the two most important women in my life.

The Line: Inflation Fell 0.1% in June

The consumer price index dipped 0.1% last month and was 3% higher than a year ago. How excited should you be about that sentence? Before you answer, let me say two things:

• This was the first monthly decline in prices—also known as deflation—since May 2020.
• This was the lowest annual rate of inflation since March 2021.

Are you excited now?

But wait Greg, don’t you always tell us that core inflation—which removes food and energy prices—is more important than the overall CPI number?

Good point, especially since gasoline prices fell 3.8% last month. FYI, food prices posted a 0.2% increase in June.

Core inflation did rise in June, but by just 0.1%. Over the past year core inflation is up 3.3%, the smallest annual increase since April 2021. That sounds pretty good to me. One thing worth noting since we focus on housing, is that housing costs continued to rise in June and are up 5.2% over the past year. The Fed doesn’t worry too much about elevated housing prices these days, due in part to the way the Bureau of Labor Statistics calculates them. I would go further into that, but it’s far too boring, even for me.
 

To sum up, a very good CPI report that shows cooling in both the headline and core inflation numbers. This will increase an already high expectation of a September rate cut, even though I still think that’s a bad idea. Remember that Fed rate cuts don’t necessarily mean mortgage rate cuts, but any report that shows cooling inflation is likely to push 30-year rates a bit lower.

Happy Birthday Jo-Ann and Mom!

Last week was my wife’s birthday, so happy birthday honey! I won’t tell you how old she is but will instead tell you she keeps getting better looking with age. And no, she didn’t force me to say that.

Yesterday was my mother’s birthday, so happy birthday mom! You are a great mother, and along with dad the primary reason I have been successful in life. I know you miss dad—we all do—but remember you have four sons and eight grandkids who love you.

Hope you both had the best birthdays ever and enjoy your party at my gig tonight.