June 2012 CPI: Prices Ticking Up Again

After a four month hiatus, consumer prices are on the upswing again (log annual and monthly changes; 2000=100):

Although annual growth is still on the way down, June prices were broadly up, but most especially prices of food and beverages, which rose 2.9% in annual log terms and 0.65% on the month (log annual and monthly changes; 2000=100):

The increase in food prices was somewhat offset by reductions in clothing, as well as a small fall in transportation and communications prices.

My feeling is that both the headline annual rate and the core rate will continue to drop back, though at a slower pace going into the second half of the year. The prospective pace of domestic economic activity suggests that this moderation won’t go too far, though we’ll probably see some pretty low numbers by the end of the year.

I’m frankly more concerned about producer prices at the moment, which looks better than ok for the moment (log annual and monthly changes; 2005=100):

…but is highly susceptible to commodity price swings and capacity utilisation rates. Given that the economy is operating close to its full employment level, I’d expect excess demand would show itself first in producer prices, before possibly feeding into consumer prices.

Technical Notes:

June 2012 Consumer Price Index report from the Department of Statistics