U.S. consumer prices rose in June, boosted by higher prices at the gas pump, the Department of Labor said Tuesday.
The government’s Consumer Price Index, which measures change in prices paid by consumers for goods and select services, rose 0.5 percent after declining one-tenth of a percentage point in May and eight-tenths in April.
That was above the 0.5 percent expected by economists.
Core CPI, which excludes the volatile food and energy categories, rose two-tenths of a percent, slightly higher than the one-tenth expected.
Compared with a year ago, prices were up six-tenths of a percentage point. Less food and energy, they were up 1.1 percent, a tenth of a point higher than forecast.
The Federal Reserve targets a two percent rise in a different measure of prices, the consumer-expenditure price index, which tends to run lower than the CPI. So these results count as well below the Fed’s target, suggesting that the Fed has more room to stimulate the economy without risking unwanted inflation.
The price of gasoline surged in June, rising 12.3 percent as people returned to driving after lockdowns. The Labor Department said that accounted for about half of the overall increase. The broader nergy index rose 5.1 percent.
The food index rose six-tenths of a percent in June, reflecting rising prices for food at home. The food at home index rose 0.7 percent after a 1 percent rise in May. The Labor Department said five of the six major grocery store food group indexes rose in June. The index for meat, poultry, fish, and eggs increased 2.0 percent, driven higher by another increase in the beef index which rose 4.8 percent in June and is up 20.4 percent over the last 3 months.
The only major grocery store food group index to decline was dairy and related products, which declined 0.4 percent in June, its first decline since July 2019.
The index for food away from home rose 0.5 percent in June following a 0.4-percent increase in May. The index for full-service meals increased 0.9 percent, its largest ever monthly increase. The index for limited service meals advanced 0.5 percent in June after rising 0.6 percent in May. These likely reflect a return to dining out in much of the country.
The rise is core-CPI suggests a recovery in demand as the economy reopened in June. This is the first increase for core prices since February.
Rising prices were not spread evenly through the economy. 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.
In one sign of reopening driving demand, prices for men’s sports coats, suits, and outerwear rose 4.7 percent in June after steep declines in April and May. Women’s apparel rose by 0.8 percent.
Car and truck rental prices jumped 17.5 percent, partially reversing the coronavirus crash. Still, compared with a year ago, prices are down 6.3 percent.
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