When Might U.S. Consumers Experience Inflation?

In June, the consumer price index in the U.S. rose by 0.3%. This is in line with expectations. Bond yields increased in reaction to the report, which suggests that the debt market expects consumers to face higher inflation.

Banks like JPMorgan Chase (JPM) and Bank of America (BAC) pulled back on the day. Bank stocks are starting to price in the odds of interest rates remaining unchanged until September.

Food prices rose by 0.3%. Consumers paid 0.3% more for groceries, where nonalcoholic beverages rose by 1.4%. Coffee prices increased by 2.2%. Companies like J.M. Smucker (SJM) are expecting weak coffee sales due to higher prices. Conversely, investors are accumulating Starbucks (SBUX) shares. They believe that the coffee chain may raise prices without losing business.

Household furnishing prices increased by 1.0%. This is a rate not seen since January 2022. In addition, the prices for appliances jumped by 1.9%. Consumers paid more for toys and sporting goods.

Markets are starting to worry about the discount store market. Costco (COST) peaked in June at over $1,060, only to close at $967.68. Walmart (WMT), however, is trading in a tight range at $95.50-$99.

BJ’s Wholesale Club (BJ) is in a severe downtrend. Conversely, investors bought Dollar General (DG) and Dollar Tree (DLTR) in the last few months.

Expect inflation to persist again through September. Tariffs are starting to show up in the price of goods.