US CPI: Outlook uncertain, but prices moving higher – Wells Fargo
|In the US, the Consumer Price Index (CPI) rose 0.6% in June and also 0.6% from a year ago. Analysts at Wells Fargo point out the report came in largely as expected and the details suggest the worst of the demand related price slump is behind us. They warn accelerating COVID-19 cases present a serious downside risk.
Key Quotes:
“The disinflationary impulse from March and April stay-at-home orders is beginning to be reversed.”
“The modest rebound in oil prices led to higher energy prices in June. The monthly average price of West Texas Intermediate crude gained about 11% in June, causing motor fuel prices to rise 12.0%.”
“Stripping out food and energy, core prices rose 0.2% in June and were up 1.2% compared to a year-earlier. The consumption categories responsible for the large declines in prices the prior three months began to reverse in June.”
“While this monthly pick-up suggests an uptick in demand for travel, demand remains depressed compared to ‘normal,’ pre-virus levels, with the number of travelers still down about 80% in June compared to a year-earlier.”
“Many of these previously depressed categories still have a long-way to go to regain their pre-virus price level. But, overall prices appear to be moving higher. We expect prices to steadily rise, albeit at a modest pace.”
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