This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Inflation Pressures Abate, at Least for Now

NEW YORK (TheStreet) -- Inflation pressures pulled back in June, allowing investors to push back fears of rising prices by at least another month.

The Bureau of Labor Statistics said Tuesday that consumer prices in June rose 0.1% from the prior month, undercutting economists' average forecast of a 0.3% increase. Prices climbed 1.9% in June 2013. 

"There's no question that we've seen inflation creep back in over the last six months. The point that I'm making is that these last two metrics we saw … on CPI and PPI, respectively, show a diminution in inflationary pressures at the core level, and that's what matters," Phil Orlando, chief equity strategist at Federated Investors, said in a phone interview from New York.

Orlando was referring to the core producer price index, a measure of cost increases for producers, which rose 0.2% in June from the prior month -- in line with economists' expectations -- as the year-over-year increase was 1.7%.

Gasoline costs in the June report posted the biggest gain since June 2013.

Market participants keep an eye on consumer prices because the Federal Reserve uses core inflation -- which excludes volatile gasoline and food prices -- as a key indicator to determine whether it must increase interest rates or keep them at historically low levels to cool down or heat up the economy.

Among economists, the question remains whether the U.S. economy is beginning to witness a real rise in inflation that should force the central bank to boost its benchmark interest rate.

"Overall, we still expect that a faster rise in core inflation will prompt the Fed to start hiking interest rates in March and force it to raise them further than widely expected," Paul Dales, senior U.S. economist at Capital Economics, wrote in a note to clients.

Fed Chair Janet Yellen has reiterated that the central bank won't raise the federal funds rate until a "significant" amount of time after it ends the economic stimulus program, but critics argued that if the core rate rises above the Fed's 2% objective then it will force the Fed to rein in rising prices amid a still-recovering economy.

However, Yellen last week told the Senate Banking Committee that she isn't worried about inflation because she said the country isn't to the point where a rise in wages could give way to a rise in inflation and she thinks that if inflation rises above 2% it won't peak much higher than that in the longer term.

-- Written by Joe Deaux in New York.

>Contact by Email.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs