- The U.S. CPI rose at a 3.0% annual rate in June
- Consumer credit growth slowed to 1.8% annual rate in May
- The NFIB Small Business Optimism Index rose to 91.0 in June
Top Three Market Headlines
Inflation Decelerates in June: The U.S. Department of Labor reported last week that the Consumer Price Index (CPI) rose 0.2% in June from the prior month and was up 3.0% on an annual basis. The yearly increase was down from an annual pace of 4.0% in May and was the lowest rate since March 2021. Significant contributors to the index's rise over the prior year were motor vehicle insurance and shelter, while energy, airline fares, technology products, and used vehicles were among categories where prices decreased. Excluding the volatile energy and food sectors, "core CPI" rose 4.8% versus the prior year, down from a 5.3% pace in May.
Consumer Credit Growth Slows: The Federal Reserve reported last week that growth in consumer credit (most credit extended to individuals, excluding real estate) increased by $7.2 billion in May, well below estimates for a $20 billion increase. This translated to a seasonally adjusted annual rate of 1.8% compared to a 5% pace in the prior month and marked the lowest monthly increase in consumer borrowing since November 2020. Revolving debt, mostly representing credit cards, increased by 8.2%, a decrease from the 13.8% rise the prior month. Non-revolving debt associated with student loans and auto loans declined by 0.4% after growing by 2.1% the prior month, the first decline since April 2020.
Small Business Confidence Improves Modestly: The National Federation of Independent Business (NFIB) reported last week that its Small Business Optimism Index increased by 1.6 points in June to 91.0. While this was a seven-month high, it remained well below the index's 49-year average of 98. Survey results indicated improvement in the percentage of small business owners expecting better future business conditions and those expecting sales to improve. While owners continued to note that inflation remained one of their top business concerns, the net percent of owners increasing prices in June fell to 29%, the lowest level since March 2021.