Truflation’s Oliver Rust: Gasoline reversal could unwind June’s inflation cooldown

Investing.com -- June's cooler-than-expected inflation print masked a one-off drop in energy prices rather than signaling a broader easing, according to Oliver Rust, Head of Data at Truflation, who told Investing.com that the stickier parts of the basket continue to run hot.

"Beneath the headline, almost all of the downside came from one highly volatile part of the basket," Rust commented, pointing to a nearly 10% drop in gasoline prices in June as crude prices eased and geopolitical risk premiums unwound.

"Moves like that in energy can swing headline CPI without telling you much about the broader inflation picture."

Rust said services inflation remains elevated across housing and education, categories that adjust far more slowly than energy markets.

He added that despite the cooler headline number, the data does "not materially change our inflation outlook for the remaining quarter and year."

The comments came the same day the U.S. also released June producer price index data, which fell 0.3% versus expectations of a flat reading and a sharp reversal from the prior month's 0.6% increase.

Looking ahead to July, Rust stated that Truflation's real-time tracking already shows gasoline prices turning higher again, a trend he noted lines up with recent readings from AAA and GasBuddy. If that continues, he said, one of the main drivers behind June's disinflation "could reverse almost as fast as it showed up."

Rust also commented on a broader point about inflation measurement. Official CPI remains the benchmark, he said, but it is built on sampled data that produces only a monthly snapshot of a fast-moving economy.

Real-time data doesn't replace that benchmark, he added, but gives policymakers, investors and businesses another way to catch turning points as they happen. "Together, the two give a fuller picture than either one does alone," he remarked.

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