Time to cut rates!

Said Donald Trump on his morning conference call with Kevin Warsh.

I’m just joking. Maybe.

Inflation data released on Tuesday by the BLS suggested both overall and underlying price growth was far slower than expected in June. Indeed, the headline and core CPI gauges each showed a MoM decline.

Although the all-items gauge was expected to fall in June from May, the drop on the core index was a surprise. The unrounded core print, -0.017%, stunned economists who expected a 0.2% advance.

As the figure below shows, this marks the first month-to-month decline on the core gauge since May of 2020.

The YoY pace slipped below 2.6%, the slowest since March.

The unrounded MoM decline on the all-items index was -0.422%. On a YoY basis, headline inflation rose 3.5% last month, down 0.7ppt from May’s annual rate and far slower than consensus expected.

Needless to say, the energy index was the largest contributor to the decline for headline inflation. The MoM drop on the energy gauge was nearly 6%, The gasoline index fell back almost 10%.

But a quick look under the hood shows prices also fell in June (from May) for medical care, transportation, used vehicles and clothes. The shelter gauge rose just 0.1%.

CPI-derived versions of so-called “supercore” inflation — i.e., core services price growth stripping out housing — all showed a MoM decline. The ex-OER/rent print, for example, was -0.2%.

Moreover, core goods prices fell for a second straight month, marking the first back-to-back decline in nearly two years.

Taken at face value, this release was unqualified good news. If there was any chance of an “adjustment” hike from the Warsh Fed later this month, there isn’t now.