{"id":12727,"date":"2026-07-10T16:18:25","date_gmt":"2026-07-10T16:18:25","guid":{"rendered":"https:\/\/www.rbc.com\/en\/economics\/?p=12727"},"modified":"2026-07-10T17:52:38","modified_gmt":"2026-07-10T17:52:38","slug":"lower-gas-prices-will-not-change-underlying-core-trends","status":"publish","type":"post","link":"https:\/\/www.rbc.com\/en\/economics\/us-week-ahead\/lower-gas-prices-will-not-change-underlying-core-trends\/","title":{"rendered":"Lower gas prices will not change underlying core trends"},"content":{"rendered":"\n
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Next week brings several major data releases, with CPI as the focal point. We expect headline CPI fell -0.2% m\/m in June, <\/strong>driven by lower gasoline prices following the US-Iran MOU signed in mid-June, bringing the y\/y rate to 3.7%.<\/strong> Core CPI likely rose +0.2% m\/m, pushing the annual pace to 2.8%.<\/strong><\/p>\n<\/div><\/div>\n<\/div>\n<\/div>\n\n\n\n

We look for core goods prices to remain flat on a month-over-month basis, as tariff pressures reverse following the overturn of IEEPA<\/a>. Still, with sector specific tariffs in place (i.e., section 232), goods including motor vehicle parts and used vehicle prices may show an acceleration, reflected in the recent uptick in the Manheim Used Vehicle Value Index. Within core services, shelter remains a source of pressure \u2014 OER and rent have both trended higher since last summer and we don\u2019t expect either will provide relief for the remainder of the year. Additionally, elevated hotel pricing tied to the World Cup has pushed shelter higher. We do expect a reversal in August after the World Cup concludes, but it will hardly be enough to offset the broader rent and housing trends.<\/p>\n\n\n\n

We expect June retail sales to show a similar decline in headline reading due to lower gas prices. We expect the fall in gas prices was large enough to pull the headline print negative (-0.4% m\/m). Stripping out the impact of gasoline and auto sales, spending likely rose +0.2% m\/m. <\/strong>Consumers appear to be losing momentum as the tailwind from tax refunds fades and real wage declines weigh on purchasing power. The retracement in revolving consumer credit in May \u2014 the largest improvement in outstanding balances since late 2024 \u2014 suggests households prioritized debt repayment over incremental spending, even with relief at the pump. But a strong month of auto sales data suggests the momentum remains for upper income households \u2013 we look for auto sales to rise 1.0% m\/m, as upper income households continue to account for a growing share of consumer spending.<\/p>\n\n\n\n

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Aside from CPI and retail sales data, here\u2019s what else we\u2019re watching next week:<\/p>\n\n\n\n