Slight upside surprise in June core consumer prices as headline y/y moved down amid the base effect. The breakdown shows a further uptick in housing costs (shelter) while there has also been some upward movement in household furnishings and apparel (which was slightly less deflationary), perhaps reflecting tariff effects.
Consumer prices remained steady in June with prices actually falling m/m, which kept the y/y rate at 2.7%. The backdrop would have been more encouraging had swine flu not taken its toll on meat prices while fresh fruit and vegetables have also soared over the past few months.
Slight downside surprise versus market expectations but really nothing too unexpected. The underlying inflation story remains moderate short-term disinflation. There is not much sign the initial raft of tariffs have had much of an effect on consumers, with goods prices a little easier.