Consumer prices showed a modest decrease in the month of June, according to a report released by the Labor Department on Friday, with prices falling for the third consecutive month amid a another notable decrease in energy prices.
The report showed that consumer prices edged down by 0.1 percent in June following a 0.2 percent drop in May and a 0.1 percent decrease in April. The modest decrease in prices came in line with the expectations of economists.
The continued decrease in consumer prices was largely due to a steep drop in energy prices, which fell by 2.9 percent in June, matching the decrease seen in the previous month.
A decline in gasoline prices accounted for most of the decrease in energy prices, with gas prices dropping by 4.5 percent in June after falling by 5.2 percent in May.
The report also showed that food prices came in flat for the second consecutive month, as a drop in prices for fruits and vegetables was offset by higher prices for meats, poultry, fish, and eggs.
Peter Boockvar, equity strategist at Miller Tabak, said, "Food prices need to be watched over the 2nd half of the year as corn, sugar, cocoa, wheat, soybeans and coffee have all been rallying sharply."
Meanwhile, core prices, which exclude food and energy prices, increased by 0.2 percent in June after edging up by 0.1 percent in May. Economists had expected core prices to rise by 0.1 percent.
The modest increase in core prices was partly due to higher prices for apparel and used cars and trucks, which rose by 0.8 percent and 0.9 percent, respectively.
"Deflation talk in the market has taken over but was not evident in the core data today," Boockvar said.
The report also showed that headline consumer prices were up 1.1 percent compared to the same month a year ago, while core prices showed a 0.9 percent annual rate of growth.
The Labor Department released a separate report on Thursday showing that producer prices fell by much more than economists had expected in June due to a substantial decrease in food prices.
Producer prices fell by 0.5 percent in June following an unrevised 0.3 percent decrease in May, while economists had been expecting a much more modest decrease in prices of about 0.1 percent.
A steep drop in food prices contributed to the bigger than expected decline, with food prices falling by 2.2 percent in June after showing modest decreases in each of the two previous months. Energy prices also showed a notable decline, sliding by 0.5 percent in June after falling by 1.5 percent in the previous month.
Excluding the decreases in food and energy prices, the core producer price index edged up by 0.1 percent in June after rising by 0.2 percent in the previous month. The modest increase in core prices came in line with economist estimates.
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