A Slightly, Slightly Unfavorable CPI Report

The Wall Street Journal writes:

WSJ.com - Consumer Prices Climb 0.2% Despite Drop in Energy Costs: JENNIFER CORBETT DOOREN and JEFF BATER: June consumer prices increased by 0.2%, after climbing 0.4% in May, the Labor Department said Wednesday. Core consumer prices, which exclude food and energy items, grew 0.3% in June for the fourth consecutive month at that pace. The core increase was just above Wall Street expectations while the overall consumer prices were in line with expectations. The median estimate of 22 economists surveyed by Dow Jones Newswires and CNBC had projected a 0.2% gain in the main number and a 0.2% rise in the core....

Markets reacted immediately to the numbers. Stock futures gave up early gains, on the expectation the Fed will be more likely to raise interest rates again in August. The federal-funds futures contract at the Chicago Board of Trade, where traders bet on future Fed policy, priced in a 90% chance of a quarter-point August increase, compared with 68% before the consumer-price release.... The Labor Department's consumer price report showed prices are 4.3% higher than a year ago with core prices rising by 2.6% during the same time frame. During the past three months overall consumer prices have risen 5.1% and have been up by 3.6% when food and energy prices are excluded...