Annual Inflation and Consumer Prices in June Rise Most Since 2008

For a second straight instance, the annual pace of United States inflation ran the quickest in nearly 13 years, according to government data released Tuesday, July 13.

Food and energy prices maintained higher-than-desired increases from a month and a year earlier. Annual core inflation, which discounts both, posted its highest rate since late 1991. And again, used car and truck prices showed drastic gains.

The question still remains on whether the pick-up in inflation is transitory due to circumstances related to the pandemic.

"Is the ‘transitory’ debate over?" MarketWatch quoted senior economist Jennifer Lee of BMO Capital Markets. "The answer is no, the transitory debate is far from over. In fact, it got a little hotter."

"Inflation surprised substantially to the upside in June but, once again, owing to outsized increases in prices in a few categories," Bloomberg News quoted Michelle Meyer, head of U.S. economics at Bank of America. "This reinforces the idea of transitory inflation.

In the headline monthly figure, U.S. consumer prices increased 0.9% in June, the largest 1-month gain since June 2008 and after rising 0.6% in May, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a broad measure of what Americans pay for everyday items ranging from tomatoes to transportation.

In some key consumer pricing categories:

  • Prices at the pump increased 2.5% last month after dipping 0.7% in May. Gasoline prices advanced 45.1% year-over-year.

  • The broader index for energy, which combines items like gasoline, electricity and fuel oil, rose 1.5% in June. The index was unchanged in the prior month. Energy prices increased 24.5% in the past 12 months.

  • Prices for food grew 0.8% following two straight increases of 0.4%. Food prices rose 2.4% year-over-year.

Excluding the more volatile food and energy components, core consumer prices increased 0.9% in June after rising 0.7% in May. The level matches the gain in May which registered as the largest monthly increase since April 1982.

"Many of the same indexes continued to increase, including used cars and trucks, new vehicles, airline fares, and apparel. The index for medical care and the index for household furnishings and operations were among the few major component indexes which decreased in June," the Labor Department’s monthly report said.

The cost of health care declined 0.1% for a second month in a row. Health care prices increased 0.4% year-over-year, for the smallest gain (again) since the annual period ending March 1941.

Prices for used cars and trucks surged 10.5% in June after jumping 7.3% in May and soaring 10% in April. They are 45.2% higher than a year ago.

"This increase accounted for more than one-third of the seasonally adjusted all items increase," the report noted.

"…This was the largest monthly increase ever reported for the used cars and trucks index, which was first published in January 1953," it added.

Shelter or housing costs for the month picked up 0.5% from 0.3%. They increased 2.6% from a year earlier. Components of shelter include pricing items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. The index accounts for about one-third of the entire CPI.

In the headline annual figure, inflation in the United States jumped 5.4% in the 12 months ended June, for the biggest gain (again) since the annual period ending August 2008, when oil soared above $150 a barrel. Inflation rose 5.0% previously.

Core inflation increased 4.5% over the past 12 months, for the largest 12-month gain since November 1991 and against 3.8% previously. The core, "all items less food and energy" index is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) as it helps the central bank decide where to set its key interest rate.

The following table of key inflation figures is for the last seven months through June, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi) on July 13, 2021. To index the data each month, the BLS monitors the prices of about 80,000 consumer goods and services from around the nation. All monthly and annual pricing changes are in percentages.

December 2020 to June 2021 Consumer Prices – Gains & Losses in Percent

  December 2020 January 2021 February 2021 March 2021 April 2021 May 2021 June 2021 12 Month
All items 0.2 0.3 0.4 0.6 0.8 0.6 0.9 5.4
  Food 0.3 0.1 0.2 0.1 0.4 0.4 0.8 2.4
    Food at home 0.3 -0.1 0.3 0.1 0.4 0.4 0.8 0.9
    Food away from home 0.4 0.3 0.1 0.1 0.3 0.6 0.7 4.2
  Energy 2.6 3.5 3.9 5.0 -0.1 .0 1.5 24.5
    Energy commodities 5.1 7.3 6.6 8.9 -1.4 -0.6 2.6 44.2
      Gasoline (all types) 5.2 7.4 6.4 9.1 -1.4 -0.7 2.5 45.1
      Fuel oil 10.2 5.4 9.9 3.2 -3.2 2.1 2.9 44.5
    Energy services 0.2 -0.3 0.9 0.6 1.5 0.7 0.2 6.3
      Electricity 0.4 -0.2 0.7 .0 1.2 0.3 -0.3 3.8
      Utility (piped) gas service -0.4 -0.4 1.6 2.5 2.4 1.7 1.7 15.6
  All items less food, energy .0 .0 0.1 0.3 0.9 0.7 0.9 4.5
    Commodities less food, energy 0.1 0.1 -0.2 0.1 2.0 1.8 2.2 8.7
      New vehicles 0.4 -0.5 .0 .0 0.5 1.6 2.0 5.3
      Used cars and trucks -0.9 -0.9 -0.9 0.5 10.0 7.3 10.5 45.2
      Apparel 0.9 2.2 -0.7 -0.3 0.3 1.2 0.7 4.9
      Medical care -0.2 -0.1 -0.7 0.1 0.6 .0 -0.4 -2.2
    Services less energy .0 .0 0.2 0.4 0.5 0.4 0.4 3.1
      Shelter 0.1 0.1 0.2 0.3 0.4 0.3 0.5 2.6
      Transportation -0.6 -0.3 -0.1 1.8 2.9 1.5 1.5 10.4
      Medical care -0.1 0.5 0.5 0.1 .0 -0.1 .0 1.0

 

The BLS tends to release inflation data around the middle of a month based on consumer prices surveyed in the previous month. The Consumer Price Index (CPI) for May and the latest annual period become public on August 11, 2021.

CPI data is used in calculating inflation rates and in this site’s U.S. Inflation Calculator. The US Inflation Calculator shows cumulative inflation and the change in buying power of the U.S. dollar over time.

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