Consumer prices were up +0.6% in June, largely due to a +12.3% increase in gasoline prices. This was the first increase in gasoline prices after 5 consecutive months of declines and gasoline prices are still down -23.2% for the year. Prices also increased for food (+0.6%), apparel (+1.7%) and transportation services (+2.1%), but fell for used cars (-1.2%) and electricity (-0.3%). For the year, food (+4.5%), medical care services (+6.0%), and shelter costs (+2.4%) saw the highest gains, while energy (-12.6%), apparel (-7.3%), transportation services (-7.0%), and used cars (-2.8%) saw the steepest drops. Core inflation, which removes the volatile food and energy components, was up +0.2% for the month and +1.2% for the year.

Retail sales were up +7.5% in June to $524.3 billion after an +18.2% increase in May. Although sales still remained well below their level one year ago, partial business reopenings increased monthly sales for clothing (+105.1%),   food services (+20.0%),   electronics (+37.4%), and furniture (+32.5%), and increasing gas prices boosted sales for gas stations (+15.3%). Motor vehicle sales were up +8.2% for the month and +7.5% for the year, and sales excluding motor vehicle and gasoline were up +6.7% for the month and +1.6% for the year. On a yearly basis, sales declined the most for food services (-26.3%), clothing (-23.2%), gasoline (-19.1%), and electronics (-12.7%), and increased most significantly for nonstore retailers (+23.5%), sporting goods (+20.6%), building supplies (+17.3%), and food stores (+12.4%).

The Federal Reserve’s Beige Book economic summary, prepared with data collected before July 6th, noted that economic activity had increased but still remained well below pre-pandemic levels. Loan demand outside of the Paycheck Protection Program (PPP) was flat, and many firms reported that they had sufficient liquidity for the near term thanks to the PPP and loan deferrals from private lenders. Employment had improved, but not recovered entirely, and contacts reported high job turnover rates and new layoffs along with continuing concerns about health and safety, childcare, and increased unemployment benefits. Prices remained generally flat, with increases mostly due to low inventories (for new and used vehicles) and supply chain problems (for COVID-19 related health and safety equipment). Contacts assessed that the economic outlook remained highly uncertain due to questions on the duration of the pandemic and the magnitude of its economic impact.