U.S. Inflation Near 41-Year High as CPI Hits 9.1% in June

More widespread increases in what American consumers paid in June for goods and services drove annual inflation to a new 40-year peak — actually, nearer to a 41-year high, according to U.S. government data released Wednesday, July 13.

Energy, food and shelter prices accelerated again in June and from a year ago, as did costs for items like vehicles, clothing, and healthcare. Airline fares were one of the few items to post a decline — at least for the month.

In the headline monthly figure, U.S. consumer prices increased 1.3% in June after rising 1% 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 eggs to electricity.

"The increase was broad-based, with the indexes for gasoline, shelter, and food being the largest contributors," the Labor Department’s report stated, while also noting the energy index contributed to nearly half the "all items" increase.

Food prices rose 1% with groceries up 1% and the cost of dining out up 0.9%. Food prices jumped 10.4% year-on-year, the largest rate of inflation for food since February 1981, with costs soaring 12.2% for groceries, the most since April 1979, and 7.7% for foods consumed outside of the home, which was the most since November 1981.

Prices at the pump increased 11.2% in June after climbing 4.1% in May. They soared 59.9% from a year earlier, marking the largest rate of inflation for gasoline since March 1980.

The broader index for energy, which combines items like gasoline, electricity, and fuel oil, increased 7.5% last month from 3.9% previously. Energy prices rose 41.6% from a year ago.

Excluding the more volatile food and energy components, the rate of core consumer prices rose 0.7% following two straight 0.6% increases.

Shelter or housing costs picked up 0.6% for a second month in a row, the largest gains since March 2004. They advanced 5.6% from a year earlier for their biggest 12-month increase since February 1991. 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. This index accounts for about one-third of the entire CPI.

Airline fares retreated 0.2% last month after jumping 12.6 in May and 18.6% in April, which was their biggest 1-month increase since the inception of the series in 1963. They are 34.1% higher year-over-year.

Clothing prices increased 0.8% after rising 0.7%, and they advanced 5.2% from a year earlier.

New vehicle prices rose 0.7%, for their fourteenth increase in fifteen months, after rising 1% previously. Prices increased 11.4% from a year ago.

Used car and truck prices picked up 1.6% from 1.8%, following three consecutive monthly declines, and are 7.1% higher than a year ago.

In the headline annual figure, inflation rose 9.1% over the past 12 months, the highest rate of inflation since going back to November 1981, and after rising 8.6% previously. The level has now topped 6% for nine straight months and has been at or above 7% for seven months in a row.

Meanwhile, core inflation rose 5.9% over the past year after advancing 6% previously. Of note, in the period ending March, the core rate at 6.5% was the highest since August 1982.

"Rather than cooling down, inflation is heating up," Sal Guatieri, senior economist at BMO Capital Markets, said in a note reported by Bloomberg News. "While a pullback in gasoline costs in July and reported retail discounting will help tamp down the flames, the broad pressure in the core rate, led by plenty of inertia in rents, suggests inflation may not peak for a while, and might remain stubbornly high for longer than anticipated."

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 guides the central bank when setting its key interest rate.

"Inflation may not peak for a while and might remain stubbornly high for longer than anticipated," MarketWatch quoted senior economist Sal Guatieri of BMO Capital Markets. "The odds of a larger-than-75-basis point Fed rate hike on July 27 just went up materially."

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, 2022. 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 2021 to June 2022 Consumer Prices – Gains & Losses in Percent
(Seasonally Adjusted)

  Dec. 2021 Jan. 2022 Feb. 2022 March 2022 April 2022 May 2022 June 2022 12 Month
All items 0.6 0.6 0.8 1.2 0.3 1.0 1.3 9.1
  Food 0.5 0.9 1.0 1.0 0.9 1.2 1.0 10.4
    Food at home 0.4 1.0 1.4 1.5 1.0 1.4 1.0 12.2
    Food away from home 0.6 0.7 0.4 0.3 0.6 0.7 0.9 7.7
  Energy 0.9 0.9 3.5 11.0 -2.7 3.9 7.5 41.6
    Energy commodities 1.3 -0.6 6.7 18.1 -5.4 4.5 10.4 60.6
      Gasoline (all types) 1.3 -0.8 6.6 18.3 -6.1 4.1 11.2 59.9
      Fuel oil -2.4 9.5 7.7 22.3 2.7 16.9 -1.2 98.5
    Energy services 0.3 2.9 -0.4 1.8 1.3 3.0 3.5 19.4
      Electricity 0.5 4.2 -1.1 2.2 0.7 1.3 1.7 13.7
      Utility (piped) gas service -0.3 -0.5 1.5 0.6 3.1 8.0 8.2 38.4
  All items less food, energy 0.6 0.6 0.5 0.3 0.6 0.6 0.7 5.9
    Commodities less food, energy 1.2 1.0 0.4 -0.4 0.2 0.7 0.8 7.2
      New vehicles 1.2 .0 0.3 0.2 1.1 1.0 0.7 11.4
      Used cars and trucks 3.3 1.5 -0.2 -3.8 -0.4 1.8 1.6 7.1
      Apparel 1.1 1.1 0.7 0.6 -0.8 0.7 0.8 5.2
      Medical care .0 0.9 0.3 0.2 0.1 0.3 0.4 3.2
    Services less energy 0.3 0.4 0.5 0.6 0.7 0.6 0.7 5.5
      Shelter 0.4 0.3 0.5 0.5 0.5 0.6 0.6 5.6
      Transportation .0 1.0 1.4 2.0 3.1 1.3 2.1 8.8
      Medical care 0.3 0.6 0.1 0.6 0.5 0.4 0.7 4.8

 

The BLS releases inflation data around the middle of a month for consumer prices surveyed up to the previous month. The Consumer Price Index (CPI) for July and the latest annual period become public on Aug. 10, 2022.

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.

Leave a Reply