U.S. Annual Inflation Rises 0.6%; Consumer Prices Rebound in June

U.S. consumer inflation bounced in June following three consecutive monthly declines, according to government figures released Tuesday, July 14, but underlying or core inflation remained rather subdued.

In the longer stretch, prices compared to a year ago swelled for food and declined for energy — despite a June surge in gasoline prices.

U.S. consumer prices rose 0.6% in June, its first monthly advance since February, after falling 0.1% in May, the Labor Department noted 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 coffee to cars.

Prices at the pump jumped 12.3% last month after falling 3.5% in May. Still, gasoline prices fell 23.4% from a year ago. The broader index for energy, which combines items like gasoline, electricity and fuel oil, rose 5.1% in June after falling 1.8% in May. Energy prices year-over-year declined 12.6%.

Overall food prices for the month increased 0.6% after climbing 0.7% previously. Food prices surged 4.5% year-on-year, their largest 12-month increase since December 2011.

"Despite supply constraints for some goods and improving post-lockdown demand for all goods, any short-term inflation pressures are bound to fade as jobs and GDP are both going to take some time to completely recover their recession losses," MarketWatch quoted deputy chief economist Michael Gregory at BMO Capital Markets. "Inflation is not going to be an issue for a long while."

Excluding the more volatile food and energy components, so-called core consumer prices increased 0.2% in June, also its first monthly advance since February, after sliding 0.1% in May.

"The indexes for apparel, shelter, and medical care also increased in June, while the indexes for used cars and trucks, recreation, and communication all declined,” the Labor Department’s report said.

Shelter or housing costs rose 0.1% in June following an increase of 0.2% in May, while their year-over-year level registered at 2.4%. 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 figure, U.S. inflation rose 0.6% in the 12 months through June after rising 0.1% in May which logged in as the smallest 12-month increase since September 2015.

Core inflation over the last 12 months rose 1.2% for a second time, the smallest core rate since March 2011. This 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 May, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi) on July 14, 2020. 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 2019 to June 2020 Consumer Prices – Gains & Losses in Percent

  Dec 2019 Jan 2020 Feb 2020 Mar 2020 April 2020 May 2020 June 2020 12 Month
All items 0.2 0.1 0.1 -0.4 -0.8 -0.1 0.6 0.6
  Food 0.2 0.2 0.4 0.3 1.5 0.7 0.6 4.5
    Food at home .0 0.1 0.5 0.5 2.6 1.0 0.7 5.6
    Food away from home 0.3 0.4 0.2 0.2 0.1 0.4 0.5 3.1
  Energy 1.6 -0.7 -2.0 -5.8 -10.1 -1.8 5.1 -12.6
    Energy commodities 3.0 -1.6 -3.5 -10.4 -20.0 -3.5 11.7 -23.2
      Gasoline (all types) 3.1 -1.6 -3.4 -10.5 -20.6 -3.5 12.3 -23.4
      Fuel oil 1.1 -0.4 -8.5 -13.7 -15.6 -6.3 10.2 -29.9
    Energy services -0.2 0.6 -0.3 -0.5 0.1 -0.5 -0.2 0.1
      Electricity -0.2 0.4 -0.1 -0.2 0.1 -0.8 -0.3 0.1
      Utility (piped) gas service -0.5 1.0 -0.9 -1.4 0.2 0.8 .0 -0.2
  All items less food, energy 0.1 0.2 0.2 -0.1 -0.4 -0.1 0.2 1.2
    Commodities less food, energy .0 .0 0.2 -0.3 -0.7 -0.2 0.2 -1.1
      New vehicles 0.1 .0 0.1 -0.4 .0 0.3 .0 -0.2
      Used cars and trucks -0.4 -1.2 0.4 0.8 -0.4 -0.4 -1.2 -2.8
      Apparel 0.1 0.7 0.4 -2.0 -4.7 -2.3 1.7 -7.3
      Medical care 1.0 -0.6 -0.6 .0 -0.1 0.1 0.2 1.3
    Services less energy 0.2 0.3 0.2 .0 -0.4 .0 0.3 1.9
      Shelter 0.2 0.4 0.3 .0 .0 0.2 0.1 2.4
      Transportation -0.1 0.3 0.3 -1.9 -4.7 -3.6 2.1 -7.0
      Medical care 0.3 0.3 0.3 0.5 0.5 0.6 0.5 6.0

 

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 July and the latest annual period become public on August 12, 2020.

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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