U.S. CPI seen up in June by most since July 2008


Higher costs for oil and gasoline likely pushed U.S. consumer prices up in June by the most for any single month since oil prices peaked last summer, according to a poll of economists.

The Consumer Price Index, the most broadly used gauge of U.S. inflation, will likely help further dissipate fears over the potential for deflation, a broad-based pattern of declining prices, and could spur inflation jitters.

The CPI for June is expected to surge 0.6 percent after a 0.1 percent rise in May, based on the median forecast of 71 economists surveyed by Reuters. If the forecasts are on target, it would be the biggest jump in the CPI since July 2008.

Stripping out erratic food and energy costs, economists expect the core CPI, considered a more reliable indicator of underlying price trends, to post a tame 0.1 percent gain following a 0.1 percent increase in May.

"The Fearsome Five drivers of disinflation in late 2008 (apparel, hotel rates, airfares, and new and used motor vehicle prices) are no longer exerting downward pressure on the core," RBS wrote in a research note.

"Barring another shock to the economy, it is difficult to imagine that cyclical downward pressures on inflation are going to intensify from here," RBS wrote.

The average cost of gasoline for June was $2.63 a gallon compared with $2.27 in May, according to the Energy Information Administration.

U.S. crude prices averaged $69.64 per barrel in June compared with $59.03 in May. Oil prices hit a record $147 per barrel last summer.

The Bureau of Labor Statistics will release the CPI at 8:30 a.m. (1230 GMT) on Wednesday.

The following is a selection of comments from economists:


Forecast: CPI: +0.6 percent

Core CPI: +0.2 percent

"The third consecutive increase in headline CPI is sure to fuel the inflation debate, but the gain in consumer prices will likely be driven by the spike in prices at the pump. Looking back further in the production pipeline, wholesale prices excluding food and energy were likely flat in June giving even less reason to be concerned about inflation in the near term."


Forecast: CPI: +0.7 percent

Core CPI: +0.1 percent

"We expect another modest jump in the core CPI reflecting trend-like increases in shelter costs and further strengthening in prices of used cars and trucks."


Forecast: CPI: +0.7 percent

Core CPI: +0.1 percent

"A sharp jump in prices at the gas pump is expected to lead to a significant run-up in the headline CPI this month. However, quotes for most other items -- such as, apparel and motor vehicles -- should show some further softness. Moreover, the key shelter category is expected to show continued signs of underlying moderation reflecting weak rental market conditions across most of the country. So, even with a bit of upside in service categories such as education and medical care -- together with another advance in used cars -- the core is expected to just barely round down to +0.1 percent."