June CPI Expected to Rise 0.23% Month Over Month

Next week, the U.S. economic calendar will be marked by the release of several critical inflation indicators, including the June Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Price Index. These reports are essential for gauging the current inflation landscape and its implications for monetary policy.

The June CPI report, due on Tuesday, is anticipated to reveal a modest increase in consumer prices. Analyst forecasts suggest that the month-over-month CPI is likely to rise by 0.23%, up from 0.1% in May. The year-over-year CPI is projected to stand at 2.6%, indicating a slight uptick in inflationary pressures. The core CPI, which excludes volatile food and energy prices, is expected to increase by 0.3% on a month-over-month basis, compared to 0.1% in May. This suggests that underlying inflation may be gaining momentum.

Following the CPI release, the PPI for June will be published on Wednesday. This index tracks the average change over time in the selling prices received by domestic producers for their output. The PPI is expected to show limited pass-through of tariff effects, suggesting that producers may not be fully transferring increased costs to consumers. However, recent trends in the ISM PMI Prices data indicate that core PPI figures are likely to rise compared to May, with core PPI moving past 3% on a year-over-year basis. This could signal that inflationary pressures are building in the production sector.

The Retail Price Index, which monitors changes in the prices of goods and services purchased by consumers, will also be closely watched. While specific forecasts for the Retail Price Index are not available, it is expected to mirror the trends observed in the CPI and PPI data. An increase in the Retail Price Index would indicate that consumers are facing higher prices for everyday goods and services, potentially supporting the case for tighter monetary policy.

The release of these inflation reports is likely to influence market sentiment and expectations for future monetary policy decisions. If the data shows a significant acceleration in inflation, it could increase pressure on the Federal Reserve to raise interest rates. Conversely, if inflation remains subdued, it may provide some relief to markets concerned about the potential for aggressive policy tightening.

In summary, next week's macro outlook for the U.S. is centered around key inflation data, with the June CPI, PPI, and Retail Price Index set to provide insights into the current state of inflation. Analysts expect to see a slight acceleration in consumer prices, with the core CPI and PPI figures ticking higher compared to May. The data will be closely scrutinized for signs of building inflationary pressures and their potential impact on monetary policy.