Business & Economy

US consumer prices climb sharply again in June

Washington, Jul 13 (EFE).- Consumer prices in the United States rose 5.4 percent for the 12 months ending in June, the highest increase since August 2008, the Bureau of Labor Statistics said Tuesday.

That spike eclipsed the 5 percent jump in the consumer price index for all urban consumers (CPI-U) for the 12 months ending in May, which also had been the biggest in 13 years.

The CPI-U increased by a seasonally adjusted 0.9 percent in June compared to May, the biggest one-month change since June 2008, when that index rose 1 percent.

That jump was mainly driven by a sharp rise in prices of used cars and trucks and of gasoline, which climbed 10.5 percent and 2.5 percent, respectively, compared to May.

The core price index, which excludes volatile food and energy prices, rose 4.5 percent for the 12 months ending in June and 0.9 percent from May.

The BLS’s latest Consumer Price Index Summary was released as the economy recovers from the coronavirus crisis, which caused demand for goods and services and prices to plummet, and comes two weeks before the next meeting of the Federal Open Market Committee, the US Federal Reserve’s monetary policy-making body.

Fed Chairman Jerome Powell said after last month’s meeting, when the central bank once again left its benchmark interest rate unchanged at a target range of between zero and 0.25 percent, that price volatility is certainly possible due to rapid and large shifts in demand and an inability for companies to quickly boost supply because of bottlenecks, hiring difficulties and other constraints.

But although the 2021 inflation forecast of meeting participants rose to 3.4 percent, up from 2.4 percent in March, Powell and his central bank colleagues expect that rate will move back down next year and remain around the Fed’s target level of 2 percent in 2023.

The Fed therefore has no plans to raise its federal-funds rate, the rate banks charge each other for short-term borrowing, in the near future. EFE


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