The US experienced deflation (0.06% mom) for the first time since May 2020.
Recent Deflation Trends
Technically, there was 0.01% deflation in July 2022, comparable to or stronger deflation only in the Covid period.
As for the data, CPI fell 0.06% m/m in June, down +0.09% in three months, and the 5-year historical average from 2015 to 2019 is 0.15%.
Core inflation rose 0.06%, mom, up +0.17% in three months, +0.27% monthly average in 1H 2024 vs. +0.27% in 2H 2023 and +0.37% in 1H 23, and the 5-year historical average from 2015 to 2019 is 0.17%.
In three months, inflation has returned to normal or better than the 2015 - 2019 average, and in 1H 2024 CPI is 1.5 times normal, and core inflation is 1.6 times normal.
Inflation Analysis
For the first half of the year, the average monthly price growth rate is 0.23% , what does it consist of?
- Contribution of food, beverages, and public catering +0.022 percentage points (p.p.)
- Clothing and footwear +0.006 p.p.
- Education, communications and IT +0.01 p.p.
- Cost of living (rent, housing and utilities, hotels) +0.158 p.p.
- Medicine (goods and services) +0.027 p.p.
- Transportation and fuel deflation 0.003 p.p.
- Culture, sports and entertainment +0.006 p.p.
- Other goods and services +0.009 p.p.
Conclusion
Deflation in June 2024 is a significant event, the first such event since May 2020. While there was a slight deflation in July 2022, it was not as marked as the current trend. CPI and core inflation data indicate a return to normal inflation or better than the 2015 - 2019 average. The average monthly price growth rate for the first half of the year indicates that housing costs, as well as other sectors such as food, food services, and health services, contributed significantly to inflation. Overall, the inflation data for the first half of 2024 reflect a complex interaction of factors determining price changes in the economy.