The CPI rose 0.2% in May, helped by a rise in energy costs and core services according to analysts a Wells Fargo.
Key Quotes:
“Consumer price inflation continues to gradually pick up.
“As expected, a jump in gasoline prices lifted the index in May.”
“We expect the contribution from energy to be more muted in the coming months, as oil prices ease.”
“While average hourly earnings growth has picked up only modestly, wage pressures are building in what has become an increasingly tight labor market.”
“We do not believe we need to see earnings growth strengthen in order to see more inflation. Inflation tends to lead earnings, not the other way around, as businesses try to get ahead of rising input costs.”
“We expect to see core CPI continue to run a bit above 2 percent in the coming months. Core PCE, which is more closely watched by the Fed, should also move higher, reaching the FOMC’s target of 2.0 percent as soon as the third quarter. That should pave the way for the Fed to raise rates not only at the end of tomorrow’s
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