U.S. consumer inflation rises on high gasoline prices

WASHINGTON Tue Jul 22, 2014 9:17am EDT

A woman shops for groceries at a Whole Foods supermarket in New York May 18, 2010. REUTERS/Shannon Stapleton

A woman shops for groceries at a Whole Foods supermarket in New York May 18, 2010.

Credit: Reuters/Shannon Stapleton

WASHINGTON (Reuters) - U.S. consumer prices rose in June as the cost of gasoline surged, but the underlying trend remained consistent with a gradual build-up of inflationary pressures.

The Labor Department said on Tuesday its Consumer Price Index increased 0.3 percent last month, with gasoline accounting for two-thirds of the gain, after May's 0.4 percent rise.

In the 12 months through June, the CPI increased 2.1 percent after a similar rise in May.

Inflation is creeping up as the economy's recovery becomes more durable, a welcome development for some Federal Reserve officials who had worried that price pressures were too low.

The steady increases have led some economists to predict that a separate inflation gauge watched by the Fed, currently running below the U.S. central bank's 2 percent target, could breach that target by year-end as an acceleration in job growth lifts wages.

Fed Chair Janet warned last week the Fed could raise interest rates sooner and more rapidly than currently envisioned if the labor market continued to improve faster than anticipated by policymakers.

The dollar reversed losses against the euro on the data, while U.S. stock index futures extended gains. Prices for U.S. Treasury debt trimmed losses.

Last month's increase in the CPI was in line with economists' expectations. Gasoline prices jumped 3.3 percent, the largest rise in a year, after increasing 0.7 percent in May.

While prices for electricity also rose, they slowed from May's brisk 2.3 percent increase. Food prices edged up 0.1 percent in June, the smallest rise since January

Food prices have now advanced for six straight months. A drought in California last year has been pushing up prices, but the momentum is ebbing.

Prices for dairy products, cereals, fruit and vegetables fell last month. The index for meats, poultry, fish and eggs rose, however.

Stripping out food and energy prices, the so-called core CPI rose 0.1 percent, slowing after May's 0.3 percent increase.

In the 12 months through June, the core CPI increased 1.9 percent after rising 2.0 percent rise in May. Economists had forecast the core CPI rising 0.2 percent from May and 2.0 percent from a year-ago.

The core CPI was held back by declines in prices for new motor vehicles and used trucks.

The cost of shelter moderated a bit as did airline fares and medical care services, which were flat. There were big increases in tobacco prices and the cost of household furnishing and operations rose for the first time in a year.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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Comments (3)
betrayed wrote:
Inflation soars in America but because Social security doesn’t count food, energy or Medicine our seniors get pennies instead of dollars as an increase. So its dog food for dinner or your medicine take your pick. Obama lets in millions of illegals but spits on the elderly.

Jul 22, 2014 9:46am EDT  --  Report as abuse
brotherkenny4 wrote:
I would argue that all inflation is a direct result of increased oil and fuel prices. As oil becomes more expensive so does everthing else which depends on transportation. The exception might be those things that use electricity, although coal is getting more expensive too. Not to mention the unseen societal costs to these filthy energy vcarriers.

Jul 22, 2014 11:31am EDT  --  Report as abuse
jdl51 wrote:
Betrayed: 1.9% isn’t exactly soaring inflation. The CPI does include food and energy. The core inflation rate does not. Better to remain silent and thought a fool than to speak out and remove all doubt.

Jul 22, 2014 11:41am EDT  --  Report as abuse
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