Consumer prices post biggest gain since 2012

Washington

US CONSUMER prices posted the biggest monthly gain since 2012 on a rebound in gasoline costs, though inflation remained subdued more broadly amid the pandemic.

The consumer price index in June jumped 0.6 per cent from the prior month, the first increase since February, after a 0.1 per cent drop in May, Labor Department figures showed on Tuesday. The median forecast in a Bloomberg survey of economists called for a 0.5 per cent increase. Compared with a year earlier, the gauge increased 0.6 per cent.

Gasoline prices jumped 12.3 per cent and accounted for more than half the gain in the overall CPI. Even with the sharp increase, gas prices are down 23.4 per cent from June 2019.

Excluding volatile food and fuel costs, the so-called core CPI rose a more moderate 0.2 per cent from the prior month after a 0.1 per cent decrease in May. On an annual basis, core inflation increased 1.2 per cent for a second month.

As more states started to reopen their economies in June, the pickup in demand for goods and services helped to stabilise prices. At the same time, a spike in the number of cases in Sun Belt states including Florida, Arizona and Texas threaten to restrain sales and inflation.

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The government's report showed all energy costs climbed 5.1 per cent in June from a month earlier.

Food prices, meanwhile, continued to rise. The cost of groceries rose 0.7 per cent from the prior month as Americans continued to eat more meals at home amid the pandemic. Such prices were up 5.6 per cent from a year ago, the largest increase since 2011. Households paid 1.2 per cent more for goods in June compared with a month earlier, the biggest gain since June 2009. The cost of services, which make up the majority of the CPI, increased 0.2 per cent. Car insurance prices rebounded in June after a sharp decline, while apparel and airfares also picked up.

A separate Labor Department report on Tuesday showed average hourly earnings, adjusted for price changes, rose 4.3 per cent in June from a year earlier after a 6.4 per cent gain a month earlier. The figures have been boosted by declining numbers of low-wage workers in the workforce.

The government's report on consumer prices followed data last week that showed producer prices declined unexpectedly in June, partially due to a 27.7 per cent slump in the cost of meat. BLOOMBERG