US Inflation Hits New 6-Year High; Consumer Prices Ebb in June

The pace of annual inflation continued at a fresh, more than six-year high even as consumer prices barely picked up in June.

American consumers paid more last month for food, shelter and gasoline, according to U.S. government figures released Thursday, July 12, 2018. The cost of these same items surged from a year earlier with their annual increases ranging from 1.4% to 24.3%.

Consumer prices moved up 0.1% in June after climbing 0.2% in May, the Labor Department said in its monthly report on the Consumer Price Index. The CPI measures what Americans pay for everything from eggs to electricity. News reports polling economists had pegged June’s increase at 0.2%.

In two headline areas:

  • Prices at the pump went up 0.5% last month after advancing 1.7% in May and jumping 3% in April. Gasoline prices soared 24.3% from June 2017. The broader index for energy, which combines items like gasoline, electricity and fuel oil, retreated 0.3% in June after rising 0.9% previously. The Labor Department’s report shows it increased year-over-year by 12%.

  • Food prices moved up 0.2% last month after registering flat previously. In the longer haul, food prices advanced 1.4% over the last 12 months.

Excluding the more volatile food and energy components, so-called core consumer prices rose 0.2% for second month in a row.

"The indexes for medical care, used cars and trucks, new vehicles, and recreation all increased. The indexes for apparel, airline fares, and household furnishings and operations all declined in June," the report noted.

Shelter or housing costs slowed to a 0.1% increase after growing 0.3% in both April and May. The index rose 3.4% year-on-year. 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. Of note, the CPI report showed hotel and motel rates plunged 4.1% for their largest fall on record.

U.S. inflation surged 2.9% in the 12 months through June for the biggest gain in annual inflation rates since February 2012. It compares to the previous 2.8% increase. The level has trended upward since the period ending June 2017.

"When you look at the bigger components, there’s modest pricing pressure overall," Bloomberg News quoted Thomas Simons, an economist at Jefferies LLC. "There are some odd pockets here and there outside energy that were weak. These are all small contributors but when you have big declines in these categories, you have nicks and cuts that take down the overall index."

Core inflation grew 2.3% from a year earlier, the strongest core rate since February 2017, following an annual gain in May of 2.2%. Until March, the 12-month reading had held at either 1.7% or 1.8% for 10 consecutive months. The core annual measure 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.

"U.S. inflation continues to drift gradually higher in response to a nearly fully employed economy, with some nudging from tariffs," Reuters quoted Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. "The Fed has every reason to pull the rate trigger again in October."

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). 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 to June 2018 Consumer Prices – Gains & Losses in Percent

  Dec 2017 Jan 2018 Feb 2018 Mar 2018 Apr 2018 May 2018 June 2018 12 Month
All items 0.2 0.5 0.2 -0.1 0.2 0.2 0.1 2.9
  Food 0.2 0.2 .0 0.1 0.3 .0 0.2 1.4
    Food at home 0.2 0.1 -0.2 0.1 0.3 -0.2 0.2 0.4
    Food away from home 0.2 0.4 0.2 0.1 0.2 0.3 0.2 2.8
  Energy -0.2 3.0 0.1 -2.8 1.4 0.9 -0.3 12.0
    Energy commodities -0.7 5.8 -0.9 -4.7 3.0 1.6 0.6 24.3
      Gasoline (all types) -0.8 5.7 -0.9 -4.9 3.0 1.7 0.5 24.3
      Fuel oil 0.9 9.5 -3.6 -0.7 2.7 -0.7 2.9 30.8
    Energy services 0.4 -0.8 1.4 -0.2 -0.5 -0.1 -1.5 -0.6
      Electricity 0.2 -0.2 0.4 .0 -0.6 0.1 -1.4 -0.1
      Utility (piped) gas service 1.0 -2.6 4.7 -1.2 -0.4 -0.6 -1.7 -2.1
  All items less food, energy 0.2 0.3 0.2 0.2 0.1 0.2 0.2 2.3
    Commodities less food, energy 0.2 0.4 0.1 -0.1 -0.1 -0.1 .0 -0.2
      New vehicles 0.5 -0.1 -0.5 .0 -0.5 0.3 0.4 -0.5
      Used cars and trucks 0.7 0.4 -0.3 -0.3 -1.6 -0.9 0.7 -0.7
      Apparel -0.3 1.7 1.5 -0.6 0.3 .0 -0.9 0.6
      Medical care 0.9 -0.1 -0.3 0.1 -0.2 1.3 0.2 2.4
    Services less energy 0.3 0.3 0.2 0.3 0.2 0.3 0.2 3.1
      Shelter 0.3 0.2 0.2 0.4 0.3 0.3 0.1 3.4
      Transportation 0.3 0.8 1.0 0.2 -0.4 .0 0.2 3.7
      Medical care 0.2 0.6 .0 0.5 0.2 -0.1 0.5 2.5

 

The BLS typically releases inflation data around the middle of every 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 10, 2018.

CPI data is used in calculating inflation rates and in this site’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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