Month-over-month and year-over-year the CPI rose 0.3 percent.
The BLS CPI Report for June was a mixed basket of good, bad and indifferent details, mostly bad.
The year-over-year surge tough is mostly due to very difficult comparisons.
CPI Year-Over-Year Details
- CPI All Items: 2.7 Percent, Up 0.3 PP
- Core CPI Excluding Food and Energy: 2.9 Percent, Up 0.1 PP
- Rent of Primary Residence: 3.8 Percent, Unchanged
- Owners’ Equivalent Rent (OER): 4.2 Percent, Unchanged
- Food and Beverage: 2.9 Percent up 0.1 PP
CPI Month-Over-Month
CPI Month-Over-Month Details
- All Items: 0.29 Percent
- All Items Except Food and Energy: 0.23 Percent
- Shelter: 0.18 Percent
- Food and Beverage: 0.32 Percent
- Energy: 0.95 Percent
- Medical Care Services: 0.56 Percent
- Medical Care Commodities: 0.10 Percent
The best number in the group is shelter because it comprises 35.473 percent of the CPI. It’s tough to get good CPI numbers when shelter is rising significantly.
Today, we had a relatively bad report despite tame shelter.
Blame energy, food and beverage, and medical care services.
Looking ahead to July, the year-over-year comparison is difficult again at 0.14 percent.
For July, the year-over-year CPI will rise if the monthly CPI is over 0.14 percent. That’s a good bet from where I sit.
What’s With the Sudden Faith of Republicans in BLS Inflation Reports?
Yesterday, I asked What’s With the Sudden Faith of Republicans in BLS Inflation Reports?
Suddenly, MAGA supporters think inflation is low and guaranteed to stay that way.
Given the sudden faith in BLS numbers as well as annualizing a single month as if if means something, I present the following chart.
CPI Compounded Annual Rate of Change
Annualized inflation is now running 3.5 percent. Mercy! Should the Fed hike?
CPI Indexes
I seem to remember a time when no Libertarian would look at the above chart and claim inflation is nonexistent.
Peter St Onge did say “tariff inflation”. But due to massive front-running of tariffs, everyone should have expected a delay.
It’s not even clear the bulk of tariff increases have hit yet.
Is the Next Fed Move a Cut?
I am not convinced the answer is yes, but currently I think so. Regardless, there is a wide range of outcomes including stagflation and an economic collapse.
If jobs stay firm and tariffs ignite inflation, the Fed might be temped to hike.
It’s important to understand no one knows what Trump will do with tariffs or how the market will react. That is how I see things and that is how the Fed sees it also.
Repeating past statements. There should not be a Fed. But the one thing worse than an independent Fed is one controlled by the president.
I Officially Announce my Availability to Become the Next Fed Chair
On July 9, I posted I Officially Announce my Availability to Become the Next Fed Chair
Trump considers naming the next Fed Chair early. I have a fifteen-point plan.
I throw my name into the ring.
And I have a plan for what needs to be done. Does anyone else have a plan?
Mish’s 15-Point Fed Plan
- Explain to the nation why we don’t need a Fed and how independent central banks have created boom-bust cycles of increasing amplitude over time. The main corollary is history shows the one thing worse than independent central banks is a central bank run by politicians, frequently ending in hyperinflation.
- Surround myself with qualified insiders who understand the Fed but also believe in the mission to end the Fed.
- Stop paying interest on reserves, phased in over 18 months.
- Wind down the Fed’s balance sheet totally in 2-3 years.
- Require that assets available on demand such as checking and savings accounts are truly available on demand. That means demand deposits are parked in overnight US treasuries. This would be phased in over two years. As a result, we would have genuine safekeeping banks.
That’s the first five. Click on the above link for further discussion.
M*Vt = P*T is not gospel it is a formula
It is also totally 100 % meaningless .
I have written about this a dozen times.
Friedman assumed velocity was constant or at least relatively stable. Velocity is neither constant nor stable but it was relatively stable when he wrote MV = PT.
Velocity is a RESULT is does not cause or portend anything.
Velocity is a useless, inconsistent measure of something that has morphed over time yet never had an independent existence of its own.
Attempting to predict prices from velocity or velocity from prices is a fool’s mission.
3.6% is the tip of the iceberg…
Look at the first Trump term for a clue as to what TSCO’s policies do to profits and inflation. Margins dropped 20% and the markets fell.
Then of course Trump blew the Covid bubble with the help of the Fed…
Trump is the only idiot in the world that can’t even make a casino profitable!
Anybody who believes government inflation numbers are honest and accurate is beyond naive.
Initial sign of tariff induced inflation. More to come in the ensuing months.
Live by the pen, die by the sword
Thanks, Mish, for calling out the hubris of people like Onge – even if Doug78 (below) can’t read deeply enough to see what you’re doing.
Unfortunately, this is a major problem of bloggers with a biased audience and a rudimentary understanding of statistics. Onge – and others – want to use an annualized MoM number when it suits their own political interests, even though the BLS survey techniques were not constructed to be used that way. 1% (haha) inflation last month; the Fed is political!
Well, Onge, what is your opinion now that annualized inflation MoM is 3.5% (another haha?. Did Trump suddenly screw us all from last month (or the Fed for that matter)? Of course not, measuring prices is an inexact science of survey methodology and data collection. We see patterns and trends arising over time.
But thanks again for calling out this hubris – especially when it’s obviously completely politically motivated
June 2025 CPI data shows no clear tariff-driven inflation surge. New vehicle prices fell (-0.3% MoM), and apparel rose modestly (+0.4% MoM in June, after -0.4% in May), remaining below expectations. Home furnishings moved up, with the household furnishings and operations index rising 1.0% MoM and 4.7% YoY, driven significantly by window and floor coverings surging 4.2% MoM, which are nearly 100% sourced from China with few U.S. competitors. Perhaps tariffs will spur more domestic competition in the future.
What’s interesting is what didn’t surge as predicted. Textiles were widely expected to show tariff-caused inflation but didn’t, with apparel only up 0.4% MoM and household linens likely contributing modestly to the 1.0% MoM furnishings rise. New cars were predicted by some to show significant price increases but came in at -0.3% MoM. That shouldn’t have happened, but it did. Used cars and trucks were expected to surge due to higher parts costs; they came in negative at -0.7% MoM. Food was up slightly at 0.2% MoM (food at home) and dining out at 0.3% MoM, both below expectations. Since both are tied to tariffs and illegal immigration, they should have faced a double whammy but remained well-behaved. Medical supplies rose 0.3% MoM, also under expectations.
To sum it up, analysts will be scrambling to figure out why, and that’s good—it gives them something useful to do.
“Given the sudden faith in BLS numbers and the practice of annualizing a single month as if it means something, I present the following chart.”
Predicting a bottom using one weak data point is innovatively aggressive forecasting. You may be right, but I can’t use it.
“To sum it up, analysts will be scrambling to figure out why, and that’s good—it gives them something useful to do.”
I agree: No absolute definitive signs of tariff related inflation as of yet. Like most, I’m not able to keep up with the effects of all the tariffs on CPI. That’s why we have the BLS & other economist. I can conjecture like most for sure though.
The problem for Trump & Powell is that the trend higher is likely to continue. In Dec 2007 CPI was 4.1% and then rose to 5.6% in July just before our GR ride started.
All things considered, I think CPI has a chance of rising above 3.5% within 6 months, if Trump’s tariff war doesn’t start to wrap up by the end of the year.
My bet is that rumbles of a rate increase build significantly by the Sept meeting.
You are strenuously defending a person that rapes children.
The Dow failed to close above Dec high for eight months. The Dow is under June high.
Inflation is still raging due to too much past money creation.
He can replace JP with his son in law like Erdogen did, worked out great in Turkey.
AI above ground and 10 floors underground. PGH AI vs MBS AI. Pickup a few dozens winners after the AI data centers will cannibalize each other
The FED should get ahead of the problem this time around and raise interest rates NOW!
Can Powell increase rates on his own as Chairman? It would be great to see the smoke coming out of Trump’s ears were he to do this!
BLS CPI has always been fake. Medical is weighted as 7% when in actuality it’s share of spending is 18%. Health insurance costs are not directly measured but estimated by “retained earnings”.
Owner equivalent rent is flawed because while the actual figures are not derived from what homeowners think their rent would be, the weight of the figures is, so it’s still biased to show lower than reality prices.
Inflation at Dollar Tree is running more than 2.7%. They used to have flat $1.25 pricing. They have started raising prices in some categories to $1.50, $1.75 and even more on certain items like sunscreen.
The interesting thing about Dollar Tree is they are slowly rolling out the price increases and they aren’t even done yet. They don’t want to shock their shoppers all at once. When you boil a frog, it has to be done as slowly as possible so the frog doesn’t jump out of the pot before you can cook it.
CPI stands for Consumer Price Inflation.
You’re saying the ‘average’ consumer spends 18% of their spending on medical expenses. Source, please?
Because otherwise you are critiquing a calculation you don’t actually understand
https://www.statista.com/statistics/184968/us-health-expenditure-as-percent-of-gdp-since-1960/
In 1980, the health care weight in the CPI was 6.6%. Total healthcare spending as a percent of GNP (couldn’t find GDP figures) in 1980 was 9.4%, somewhat resembling the actual weight BLS gave it at the time.
45 years later, health weight is 6.9% of CPI while healthcare represented 18.2% of GDP in 2024.
Debate about what the actual figures are is splitting hairs. Do you think that a 6.9% weight to the healthcare component in 2025 is objectively reasonable? I don’t. I think it’s fraudulent.
Just trying to clarify your inaccurate understanding of what CPI represents – for future posting on an economics blog.
I didn’t say medical care is not a higher percentage of GDP than 7%. But what CPI shows is what consumers pay for their medical care. That’s what they care about and it’s about 7-8% of the ‘average’ consumer budget.
Yes, different government bodies also pay for medical care for different groups of people, and so that total GDP percentage is higher than 7-8%. But those medical care prices that both consumers and government entities pay are encompassed within the lesser-known and publicized GDP price deflator: https://www.bls.gov/opub/mlr/2016/article/comparing-the-cpi-with-the-gdp-price-index-and-gdp-implicit-price-deflator.htm
So the CPI number is not ‘fake’; it just measures what consumers face. If you want the total price adjustment for medical care, you need to look at a different price index
“That’s what they care about and it’s about 7-8% of the ‘average’ consumer budget”
Where’s YOUR source on that 7-8% figure? The BLS?
A combination of the 7% YOU actually used to start this conversation with and the 8% actual from the BLS calculation for CPI: https://www.bls.gov/cpi/factsheets/medical-care.htm Try to keep up.
Having a conversation with conspiracy theorists is tiring; good luck convincing others with your silly/inaccurate posts
Mish – Can you comment on what affect the fall of the dollar should be having on prices? It’s down 11% since Jan 1st which is something like the 2nd largest fall in that time frame in history.
Prices on imports should be skyrocketing (other than China which is pegged to the US dollar) by 10% unless everything is on some kind of long term contract price (something things might be contracted that way but most wouldn’t). That should be showing up in the CPI by now in certain categories because of how large the effect is.
Good point. Seldom discussed.
Higher Import Prices: A weaker dollar makes imported goods and services more expensive, as it takes more dollars to purchase the same amount of foreign currency. Since the U.S. relies on imports for many consumer goods (e.g., electronics, clothing, oil), this increases the cost of these items, contributing to inflation.
Increased Export Demand: A declining dollar makes U.S. goods cheaper for foreign buyers, potentially boosting export demand. This can drive up prices for domestically produced goods if supply struggles to keep up with demand.
I do not think we have seen the full impacts of tariffs or the us dollar yet
Fully loaded up on rental houses. I love inflation. Just love it.
Large swathes of the housing market have been rolling over, be careful out there. Leading decliners already 20% below peak prices.
Rent and OER used in CPI are very laggy but will eventually drag it down, leading to belated and unhelpful Fed rate cuts unless there’s raging inflation elsewhere.
The pandemic locations are rolling over. Big cities where people are returning to the office are doing great.
I was smart in only purchasing properties near large office centers. I am glad everyone is returning to the office.
That will work fine until their competition hires away all their competent people with the offer of remote work.
The people that are in the office are the ones that can’t get a better job.
HA, he loves inflation, so clearly he embraces the risk of speculating.
No risk, no gain.
Most of us do not love something that makes those without much money even poorer than they already are. You have a very cold heart, one can surely guess how you vote without much thought.
Rando, I hate to break it to you, but most people vote with their wallet to some extent or not. It just so happens that liberals do so more than conservatives.
But most are not gleeful about the act of gouging their business partners (aka renters), and their future potential to gouge deeper.
So do corporations which you are one ; )
Guaranteed price increases.
Even Divisia Aggregates gets this right.
DivisiaReports.xlsb
$300/hr labor rate at the Toyota dealer down the road.
That’s insane. Suggests yearly billing of 624K (300x40x52 hrs). The mechanic can’t be getting more than 100K of that so the ‘stealership’ is pocketing the other 500K.
Just say no to using the ‘stealership’ for anything other than warranty work.
May be even higher with so-called “heath care” given a higher weight commensurate with reality
Shelter inflation is barely beginning to see effects from deportations. Perhaps now that there is a threat of “third country” deportations (e.g. Mexican citizens being sent to South Sudan), Illegal immigrants will begin to step up their self-deportation rates.
The recently announced “no bond hearing” indefinite detentions (counterbalanced with an offer of an immediate $1000 and a plane ticket to their home country) should also help to step up deportation rates, and thus further bring down inflation. On net, illegal immigrants are inflationary for the US economy. The wage suppression they bring is a minor disinflationary aspect of their overall presence, in the grand scheme of money flows.
Watch the following entire Bloomberg interview, which says the loss of illegal immigrants will have deflationary effects, despite any increase in wage pressures:
https://m.youtube.com/watch?v=KkoID7wpmhU&pp=0gcJCfwAo7VqN5tD
If you believe otherwise, you are just wrong.
PS It doesn’t get more Libertarian than what is said in this left-leaning Brookings Institution interview.
NVDA: $4.2T. AMD to Oct 29/30 gap. AMD gaps will close one day.
Atlanta FED sticky price inflation is the more telling.
https://www.atlantafed.org/research/inflationproject/stickyprice.aspx?utm_medium=email&utm_source=mailchimp&utm_campaign=inflation-project
Energy services +7.5% Y/O/Y
Buy gold as the dollar continues its debasement.
OMG, now that wasn’t hard or unsurprising to predict now was it?
Apple Backs Donald Trump in Rare Earth Minerals Push by Investing $500 Million in U.S. Mine
Apple has $162B in cash.
re “That means demand deposits are parked in overnight US treasuries”
Interest on demand deposits? How absurd. The commercial banking system is a payment’s system. Savers never transfer their holdings outside the banks unless they hoard currency or convert ot other national currencies.
The purchase of securities by the saver-holders would increase the money stock. That would result in the pyramiding of earning assets. The original volume of DDs, plus the number of times DDs are redeposited in successive banks / correspondents the larger volume of deposits created.
All the monetary mistakes of the past are easily corrected. M*Vt = P*T in American Yale professor Irving Fishers’ truistic “equation of exchange”. Where M*Vt = bank debits to deposit accounts.
This is the GOSPEL
In 1931 a commission was established on Member Bank Reserve Requirements. The commission completed their recommendations after a 7 year inquiry on Feb. 5, 1938. The study was entitled “Member Bank Reserve Requirements — Analysis of Committee Proposal” its 2nd proposal: “Requirements against debits to deposits”
bit.ly/1A9bYH1
After a 45-year hiatus, this research paper was “declassified” on March 23, 1983. By the time this paper was “declassified”, Nobel Laureate Dr. Milton Friedman had declared RRs to be a “tax” [sic].
The problem is that we live in a predatory society. The most dominant economic predator is the American Bankers Association.
Remember that in 1978 (when Vt rose, but Vi fell) all economist’s forecasts for inflation were drastically wrong.
Put into perspective: There were 27 price forecasts by individuals and 9 by econometric models for the year 1978 (Business Week). The lowest (Gary Schilling, White Weld), the highest, (Freund, NY, Stock Exch) and (Sprinkel, Harris Trust and Sav.).
The range CPI, 4.9 – 6.5 percent. For the Econometric models, low (Wharton, U. of Penn) 5.7%; high, 6.6% U. of Ga.).
For 1978 inflation based upon the CPI figure was 9.018% [and Leland Prichard, in his Money and Banking class, predicted 9%].
Capitalism is inherently predatory…. not to say that any other economic system could withstand the predatory nature of insanely greedy people. Capitalism suits them though, and insanely greedy people control the government, so that’s what we have.
Yes, all human societies are inherently predatory, that’s an unfortunate part of human nature. Not all humans are predatory but enough are, and when resources are scarce it gets worse. This can be mitigated but not eliminated.
As I said in response to Powell removing legal reserves: “The FED will obviously, sometime in the future, lose control of the money stock.” May 8, 2020. 10:38 AMLink
I predicted the flash crash in stocks 6 months in advance and within one day (supposedly a “black swan”).
“The May 6, 2010, Flash Crash,[1][2] also known as the Crash of 2:45, the 2010 Flash Crash or simply the Flash Crash, was a United States trillion-dollar[3] stock market crash, which started at 2:32 p.m. EDT and lasted for approximately 36 minutes.[4]:1 Stock indices, such as the S&P 500, Dow Jones Industrial Average and Nasdaq Composite, collapsed and rebounded very rapidly.[4] The Dow Jones Industrial Average had its second biggest intraday point drop (from the opening) up to that point,[4] plunging 998.5 points (about 9%), most within minutes, only to recover a large part of the loss.[5][6] It was also the second-largest intraday point swing (difference between intraday high and intraday low) up to that point, at 1,010.14 points.”
I also predicted the flash crash in bonds:
“The Oct. 15th dis-equilibria was so profound and unique that the Treasury did a joint staff study on it with the (1) U.S. Department of the Treasury, (2) Board of Governors of the Federal Reserve System, (3) Federal Reserve Bank of New York, (4) U.S. Securities and Exchange Commission, and (5) the U.S. Commodity Futures Trading Commission.
“Diminishing market depth and a surge in volatility were both on display Oct. 15, when Treasuries experienced the biggest yield fluctuations in a quarter century in the absence of any concrete news. The swings were so unusual that officials from the New York Fed met the next day to try and figure out what actually happened”
“Even the top federal agencies in the country couldn’t find a clear-cut cause that triggered the whiplash in the U.S. Treasury bond market last October 15. The conclusion came from a report published Monday by five federal agencies, including the Federal Reserve and Securities and Exchange Commission.
On that day, within a 12-minute time frame, the U.S. Treasury market plummeted 16 basis points (0.16%) and then just as quickly rose the exact same amount. In the bond world, that’s a stomach-churning roller coaster ride.”
That equation no longer applies as it once did, ever since the Fed reduced bank reserve requirements to zero percent:
https://www.federalreserve.gov/monetarypolicy/reservereq.htm#:~:text=As%20announced%20on%20March%2015,requirements%20for%20all%20depository%20institutions.
M*Vt = P*T is not gospel it is a formula
It is also totally 100 % meaningless .
I have written about this a dozen times.
Friedman assumed velocity was constant or at least relatively stable. Velocity is neither constant nor stable but it was relatively stable when he wrote MV = PT.
Velocity is a RESULT is does not cause or portend anything.
Velocity is a useless, inconsistent measure of something that has morphed over time yet never had an independent existence of its own.
Attempting to predict prices from velocity or velocity from prices is a fool’s mission.
10 year up 6 bps to 4.485%. Where from here?
Up, please..
Only good thing about this Admin.
CPI Compounded Annual Rate of Change
The trend is definitely up. Nobody, including TACO, can argue otherwise.
Lumber prices are dropping like a rock. Copper will be like gold for a while.
Nothing to fear.
10% is still achievable with sufficient additional borrowed spending and further tariffs. .
So how long is it going to take markets to have a solid 10-15% reset from the direction of CPI?
How long does it take for WH to move on cutting Powell for cause?
Trump won’t fire Powell. He only has a year left in his term. It would smack of desperation and Trump would get extra blame for any signs of inflation as the midterms approach. Better to keep Powell in there as his whipping boy. Plus, anyone he named would be seen as Trump’s political apparatchik, which would spook the markets, both stocks and bonds.
OTOH, Trump could do it out of stupidity and stubbornness.
Desperation is his brand now. He’s a dead pedo walking.
Bibi to Trump (to Patel, Bongino, Bondi) in the meetings here this year:
“there is no Epstein list / file”
“Epstein never worked for us.”
“Got it?” “or else.”
You have inspired me… TacoMan is dead. I am now El Trumpedo!
With enough pressure, Powell may well resign. I agree Trump won’t go through the fight to fire him. But all bets are off when CPI breaches 3% IMHO. Sept reporting August CPI sounds about right.
POwell has said in the past that he will NEVER resign.
And that was before this growing $2.5B referb scandal was leaked. I’d like to see it happen just to see how markets react. It’s not like I believe Powell has done anything wrong. Or put another way, he’s now feeding at the trough just like almost everyone in Congress.
10 months left.
I am not sure that you are qualified to be Fed Chairman. Didn’t you overrun your moving budget when you moved to St. George Utah? 🙂
… and I bet there were some suspicious renovations!
Opulent construction costs are a prerequisite for the Fed Chair position.
Mish deserves dancing girls, and a couple to fan him and feed him grapes.
He blew the budget on specialized camera lenses for taking photos 🙂