Consumer prices rise less than expected

Consumer prices rose less than expected in June, according to the latest consumer price index.

CPI rose 0.2% month-on-month and 1% year-on-year. Economists had forecast that the basket of prices measured by CPI rose 0.3% month-on-month and 1.1% year-on-year, according to Bloomberg.

Compared to the prior year, core CPI rose 2.3%, and 0.2% month-on-month.

Economists had estimated that excluding ever-fluctuating food and energy costs, core CPI increased 0.2% month-on-month and 2.2% year-on-year.

That rate compared to a year ago would be above the Federal Reserve's target of 2%, although it prefers to use personal consumption expenditures as a gauge of inflation.

Here's the preview Wells Fargo's Sam Bullard sent to clients:

Aided by higher energy prices, headline CPI continued to creep higher in May, rising 0.2% over the month. The divergence between core services and core goods inflation has persisted. Core goods are in deflationary territory on a year-over-year basis (-0.5% yr/yr), while core services have touched a cycle high at 3.2% yr/yr-driven by solid shelter cost appreciation. We expect core inflation to hold steady for the remainder of the year, but for rising energy prices to help lift headline inflation to 2% by the beginning of next year.

More to come ...