Consumer prices surge by most since August 2008
Prices rose 0.9% in June
Forbes chairman and editor-in-chief Steve Forbes explains why he thinks inflation is ‘here for a while.’
U.S. consumer prices rose last month at the fastest pace since August 2008.
The Labor Department said Tuesday that the consumer price index rose 0.9% in June, faster than the 0.6% increase in May. Analysts surveyed by Refinitiv were expecting a 0.5% gain.
USED CAR PRICES STEER TOWARD FED CHAIRMAN POWELL’S INFLATION HUNCH
Used car prices spiked 10.5% last month, accounting for more than one-third of the increase. Additionally, energy prices climbed 1.5% month over month and food prices rose 0.8%.
Prices rose 5.4% year over year, and have been trending higher every month this year. Analysts surveyed by Refinitiv were expecting prices to rise 4.9% annually.
The annual data has a "base effects" skew due to the decline in prices that occurred at the start of the pandemic.
Core prices, which exclude food and energy, rose 0.9% in June, quicker than the 0.7% increase recorded in May. The 4.5% annual increase was the most since November 1991.
Higher prices seeped into large swaths of the economy as businesses have struggled to correct supply-chain bottlenecks that occurred as a result of the pandemic. Some businesses are also struggling to find workers as supplemental unemployment benefits have encouraged workers to stay home.
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The Federal Reserve has insisted the price gains are "transitory" and that they will eventually return to pre-pandemic levels as the dislocations caused by the pandemic are corrected.
However, Fed Chairman Jerome Powell has admitted that timing is "uncertain."