US inflation in June jumped by the biggest amount in four months as American consumers forked over more cash to buy groceries and gas, a government report showed on Tuesday.
It wasn’t just food and prices at the pump causing more pain to the pocket book. Prices for cloths, shelter, medical care and new cars also advanced.
Consumer prices increased 0.5% in June after advancing 0.1% in May, the Bureau of Labor Statistics (BLS) said Tuesday, July 16, in its monthly report on the Consumer Price Index. The sharp rise was larger than expected and the second biggest of the year, behind the 0.7% upturn in February. Major news outlets had polled economists who pegged an expected increase at 0.3%.
Gasoline was the big number on the government charts, accounting for two-thirds of the overall June increase. Gas prices soared 6.3% in June after holding flat in May. The cost of food fell 0.1% in May, making last month’s 0.2% increase more pinching. Some specific grocery products with higher price tags included:
- Nonalcoholic beverages by 0.2%
- Cereals, bakery goods, meats, poultry, fish and eggs each by 0.4%
In contrast to these increases, prices for fruits and vegetables and for dairy and related products dropped 0.1%.
The so-called core US inflation rate climbed 0.2% in June in matching the prior month. Used as a tracking component, the core rate strips out the more volatile food and energy prices.
Within this sub-level, advances in shelter (0.2%), medical care (0.4% for services and 0.5% for commodities) and clothing (0.9%) accounted for most of the rise, with gains in the indexes for new vehicles (0.3%) and household furnishings and operations contributing. The indexes for airline fares, used cars and trucks and recreation all declined in June.
US inflation over the last 12 months advanced 1.8%, up from the previous 1.4% increase in the 12 months ended May. Other past annual inflation rates reported by the government for 2013 included 1.1% for April, 1.5% in March, 2% in February and 1.6% in January.
"The Fed has been so aggressive in its expansionary policy, and people are concerned that will ultimately manifest in an uncomfortably high inflation rate," CNN Money quoted Steve Cunningham, director of research and education at the American Institute for Economic Research. "As we see signs of inflation picking up, that makes it more likely the Fed will start to take a less aggressive stance."
Core US inflation rose 1.6% year-over-year through June, compared to the matching 1.7% increase in May and April. The core 12-month inflation rate was reported at 1.9% in March, 2.0% in the February and 1.9% in each of the three months before then. This inflation rate is a benchmark watched closely by the Federal Reserve as it helps decide where the central bank sets its key interest rate. The latest 1.6% up-tick remains below the Fed’s 2% inflation target and is the smallest 12-month change in the rate of inflation since June 2011.
"Highly accommodative monetary policy for the foreseeable future is what’s needed in the U.S. economy," Bernanke said in response to a question after a July 10 speech in Cambridge, Massachusetts," notes Bloomberg News. He said he expects inflation to "come back up" closer to the Fed’s 2 percent goal.
Shown in table below are pricing changes for major consumer goods and services categories from December to June and over the past 12 months ended in June.
December 2012 – June 2013 Consumer Prices – Gains & Losses in Percent
|Dec 2012||Jan 2013||Feb 2013||Mar 2013||Apr 2013||May 2013||June 2013||12
|Food at home||0.2||.0||0.1||-0.1||0.1||-0.3||0.2||0.9|
|Food away from home||0.1||0.1||0.1||0.2||0.3||0.2||0.2||2.2|
|Gasoline (all types)||-1.9||-3.0||9.1||-4.4||-8.1||.0||6.3||2.8|
|Utility (piped) gas service||0.7||-1.7||1.2||1.0||4.4||2.4||-0.4||11.7|
|All items less food, energy||0.1||0.3||0.2||0.1||0.1||0.2||0.2||1.6|
|Comm. less food, energy||-0.1||0.2||.0||-0.1||.0||.0||0.2||-0.2|
|Used cars and trucks||-0.3||0.2||0.8||1.2||0.6||-0.1||-0.4||-2.3|
|Services less energy||0.2||0.3||0.2||0.2||0.1||0.2||0.2||2.3|
The US Bureau of Labor Statistics is the official source of government data for US inflation. It announced a release date and time of August 15, 2013 at 8:30 AM ET for the next report on the Consumer Price Index (CPI). This report will include changes in consumer prices for goods and services through July 2013.
CPI data is used to calculate the latest inflation rates and it is also used in this site’s inflation calculator. The calculator offers accumulated inflation and the change in the buying power of the U.S. dollar between two entered dates.