Weekly Update for June 21, 2010

The Consumer Price Index retreated 0.2% for May, following a 0.1% decline in April. Energy prices fell 2.9% last month, leading the CPI downward. (Core CPI did advance 0.1% in May.) Across the last 12 months, the CPI has risen 2.0%, with core CPI up 0.9% – the smallest annual gains since 1966. While May’s wholesale prices were 5.3% above levels of a year ago, the Labor Department said that PPI fell 0.3% on the month, which was less than the 0.5% reduction forecast by economists polled by Reuters. Translation: the Federal Reserve has no compulsion to raise interest rates.1,2