Inflation pressures in America continued to firm last month, according to a new report from the Bureau of Labor Statistics (BLS). Specifically, the seasonally adjusted consumer price index (CPI) for all urban consumers rose by 0.1 percent in June, a smaller increase than expected but enough to lift the year-over-year gain to 2.8 percent, the fastest pace of annual growth recorded since 2012.
“Core” CPI, which excludes the volatile food and energy components, rose 0.2 percent in June and 2.2 percent over the past twelve months, both in line with forecasts. The price gains were broad last month, with the only significant weakness being a sharp 4.1 percent drop in hotel and motel rates. Wholesale inflation pressures also firmed in June, which together with the CPI data should keep the Fed on track for continued gradual interest rate hikes. A trade war between the U.S. and China, though, could ratchet up inflation pressures further. That would be a problem since some economists are already worried about rising inflation’s potential impact on consumer spending, especially since today’s CPI data implies that average hourly earnings for production and nonsupervisory workers have actually declined by 0.2 percent over the past year after being adjusted price changes.
Sources: Econoday, U.S. DoL, Bloomberg, FRBSLPost author: Charles Couch