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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


Summary List Placement

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. 

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