After months of mixed messaging from the economy, this past week gave us another eyebrow-raising combo: inflation numbers came in cooler than expected, but consumers are spending like it’s Black Friday.
Let’s break it down:
🔥 CPI Says “Chill” — But Not All the Way
Core inflation (the one the Fed actually watches) rose just 0.2% in June—below the forecasted 0.3%. That’s a win, right? Kind of. While this was the second-lowest annual rate since March 2021, clocking in at 2.9% year-over-year, it’s still a far cry from the Fed’s happy place of 2%.
The main villain keeping inflation sticky? Shelter costs. Yep, housing still won’t let go. On the flip side, prices for used cars, new cars, and airfare cooled off in June like a budget airline with broken A/C.
🧱 Tariffs Are Stirring the Pot
Furniture, home goods, and clothing all got pricier last month—thank tariffs for that. And with more global trade tensions looming, don’t be surprised if that trend sticks around.
📦 Producer Prices Flatlined (In a Good Way)
Another inflation gauge, the Producer Price Index (PPI), came in flat from May (expected was +0.2%). Annual PPI? Down to 2.6%, the lowest since April. That’s good news… unless you’re in the business of raising prices.
💳 Meanwhile, Consumers Are in Full Swipe Mode
Just when we thought wallets might be tightening, Retail Sales jumped a surprising 0.6% in June—triple what was forecasted. Compared to last year? That’s a spicy 4% increase.
People are dropping cash on cars, clothes, home improvement, and nights out. Even bars and restaurants saw a jump, despite all the chatter about “belt-tightening.” Apparently, no one told Americans to stop brunching.
💭 What Does It All Mean?
The Fed is watching. Rates may not go up—but they’re not coming down quickly either. Mortgage rates ended the week basically unchanged, caught in a tug-of-war between cooling inflation and bullish spending.
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