June Inflation Report Expected To Show Cooler Pricing, But Consumers Feel Financial Strain

Thursday’s inflation report is expected to show that prices have ebbed in June as consumers face heavy financial burdens in paying more for necessities such as food, gas and rent.

Economists predict the Consumer Price Index (CPI), which tracks prices on items such as gasoline, health care, groceries and rent, will show that prices rose 3.1% in June, down from the 3.3% reading recorded in May, Fox Business reported.

But inflation is expected to be rising 0.1% on a monthly basis in June, up from a flat reading in May.

“We expect the June CPI report to be another confidence builder following the undeniably good May report,” Bank of America economists said in an analyst note.

Also Read: 60% Expect June Inflation Data Will Drop, But Most See Costs Still Rising

Other parts of the report are expected to reveal a slower retreat in inflation as core prices — which do not factor in more volatile food and energy prices — are forecasted to climb 3.4% annually. That figure is unchanged from the gain in May, indicating that price pressures remain significant on consumers. 

The Federal Reserve is shooting for a 2% inflation rate as it keeps its key interest rate between 5.25% and 5.50% as investors expect the Fed to cut rates in September and November.

Most investors now expect the Fed to cut rates in September or November, Fox Business reported.

A new LendingTree survey showed more households are more financially insecure than they were two years ago as about 36.4% of Americans expressed experiencing “significant” difficulty paying for household expenses since April.

“It's troubling that one in three American households are financially insecure,” said Matt Schulz, LendingTree chief credit analyst. “But it shouldn't be terribly surprising. The perfect storm of record debt, sky-high interest rates and stubborn inflation has resulted in many Americans' financial margin of error shrinking to virtually zero.”

Price Action: Exchange-traded funds and indexes that broadly track stocks and bonds stayed relatively flat on Wednesday morning as investors await Thursday’s CPI report.

The SPDR S&P 500 ETF Trust (NYSE:SPY), which tracks the S&P 500, edged up 0.26% by Wednesday’s mid-morning trading, as the iShares 20+ Year Treasury BondETF (NASDAQ:TLT) ticked up 0.09%.

The Dow Jones Industrial Average, which tracks 30 prominent publicly traded companies, gained 0.01% to 39,296.40 points by mid-morning on Wednesday, while the S&P 500, also a measure broader market performance, rose 0.24% to 5,590.48 points.

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Photo was created using artificial intelligence MidJourney.