Six-month CPI change points to renewed upward price pressures

A look at the six-month percent change in the CPI at the end of the second half of 2025 firms up expectations that the FOMC won’t change its mind about inflation remaining “somewhat elevated” as a reason to keep the fed funds target rate range at 4.25-4.50 percent.

In fact, the pace of consumer price increases picked up considerably over the past six months as overall prices rose for both services and commodities. The index for services is up 2.1 percent in the first half of 2025 compared to up 1.8 percent in the second half of 2024. The index for commodities prices is up 0.7 percent in the first half of 2025 after down 0.4 percent in the second half of 2024. Once more consumer prices are broadly moving away from the Fed’s 2 percent inflation objective, and not just in non-housing services.

The six-month increase in the all-items CPI is 1.6 percent in the first half of 2025, up from 1.0 percent in the second half of 2024 and nearly back to the 1.7 percent in the first half of 2024. The core CPI is up 1.6 percent in the first half of 2025 compared to up 1.3 percent and up 2.0 percent in the second and first half of 2024, respectively.

Energy prices are up 0.8 percent in the first half of 2025, although gasoline prices are down 2.6 percent. Still, the energy price index is up after two halves of decreases of 2.6 percent and 0.5 percent in the second and first half of 2024, respectively. Moderation in food prices has ended. The food price index was up 1.1 percent in the prior three halves, but up 1.6 percent in the first half of 2025.

The one bright spot may be that the persistent price gains in shelter costs have started to level off. The index for shelter is up 2.0 percent in the first half of 2024, the same as in the second half of 2024, and below the up 2.8 percent in the first half of 2024.