Thursday, July 29

Prices surged more than expected in June, as inflation continues to hit our wallets in the US




Food prices increased 0.8% between May and June.
Lucas Jackson / Reuters

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Consumer prices rose 0.9% between May and June according to the Bureau of Labor Statistics, far higher than Bloomberg’s consensus estimate among economists of 0.5%.

June’s increase in the Consumer Price Index, which tracks how the prices of a broad variety of goods and services change from month to month, follows monthly increases of 0.6% in May and 0.8% in April.

The Bureau of Labor Statistics noted in the release that this is the highest month-over-month inflation rate since April 2008’s 1.0% increase.

Prices for used cars and trucks continue to soar, rising 10.5% between May and June. The Bureau wrote that this was responsible for over a third of the total incresase in prices over the month.

Prices have been rising more quickly in the last several months amid supply chain shortages and increased demand as vaccinations take hold and the economy reopens.

The index was 5.4% higher than it was in June 2020, higher than economists’ expectations for a 4.9% year-over-year increase, according to Bloomberg. June’s annual increase follows a 4.9% year-over-year increase in May.

Food prices increased 0.8% between May and June, and energy prices increased 1.5%. These items tend to have more volatile prices than other goods and services, and the Bureau of Labor Statistics’ core CPI measure, which excludes food and energy, increased 0.9 % over the month, compared to economists’ forecasts of 0.4%.

Inflation has been one of the big concerns facing policymakers, consumers, and businesses. In April and May, used cars and trucks saw large price increases amid a semiconductor shortage that has impacted automaker supply chains. A
spike in lumber prices earlier this year
has contribued to rising home prices, but the commodity has cooled off in recent weeks.

Still, despite the recent spikes in measures like the Consumer Price Index, it remains to be seen whether or not inflation is largely driven by temporary factors tied to the unprecedented economic reopening currently underway or if we are facing the kind of sustained high inflation not seen in the US since the late 1970s.

Stickier prices like housing and rent could keep rocketing up, pushing more inflation in the long-term, and if recent wage growth in industries like leisure and hospitality continues to increase, higher labor costs could translate to higher prices.

However, many key policymakers believe that price growth is transitory and likely to return to normal once commodity and labor markets stabilize. The Federal Reserve noted in a recent report that inflation is still “in a range that is broadly consistent” with the central bank’s long -term goal of 2% inflation.

Labor Secretary Marty Walsh told Insider that he and the Biden Administration are not concerned about inflation, and instead see current price increases as temporary side effects of the reopening.



www.businessinsider.com

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