US consumer prices increase on back of rising cost of petrol
Stripping out food and energy prices, the core CPI rose 0.1% in June, after May’s 0.3% rise
Petrol prices jumped 3.3 per cent last month after increasing 0.7 per cent in May
US consumer prices rose in June as the cost of petrol surged, but the overall trend continued to point to a gradual build up of inflationary pressures.
The Labor Department said on Tuesday its Consumer Price Index increased 0.3 per cent last month after May’s 0.4 per cent gain. Petrol accounted for two-thirds of the rise in prices last month. In the 12 months through June, the CPI increased 2.1 per cent after a similar rise in May.
Inflation is creeping up as the economy’s recovery becomes more durable, a welcome development for some Federal Reserve officials who had worried that price pressures were too low.
The steady increases have led economists to predict that the main inflation gauge watched by the Fed, currently running below the central bank’s 2 per cent target, could breach that target by year-end as an acceleration in job growth lifts wages.
Economists polled by Reuters had expected consumer prices to gain 0.3 per cent in June and rise 2.1 per cent from a year-ago.
Petrol prices jumped 3.3 per cent after increasing 0.7 per cent in May.
Prices for electricity also rose, but slowed from May’s 2.3 per cent increase.
Food prices edged up 0.1 per cent in June, the smallest rise since January. Food prices have now advanced for six straight months. A drought in California last year has been pushing up prices, but the momentum is ebbing.
Stripping out food and energy prices, the so-called core CPI rose 0.1 per cent, slowing after May’s 0.3 per cent increase.
In the 12 months through June, the core CPI increased 1.9 per cent after rising 2.0 per cent rise in May. Economists had forecast the core CPI rising 0.2 per cent from May and 2 per cent from a year-ago.
The core CPI was held back by declines in prices for new motor vehicles and used trucks. The cost of shelter moderated a bit as did airline fares and medical care services, which were flat.