U.S. Consumer Prices Increase at Fastest Annual Rate since 2012
12 July 2018 - 11:00PM
Dow Jones News
By Paul Kiernan and Eric Morath
WASHINGTON--U.S. consumer prices rose for a third straight month
in June, eating away at sluggish wage growth and sending inflation
to its highest rate in more than six years.
The consumer-price index, which gauges what Americans pay for
everything from veterinarian services to baby clothes, rose a
seasonally adjusted 0.1% in June from the prior month, the Labor
Department said Thursday. Excluding volatile food and energy
components, prices increased 0.2%. Economists surveyed by The Wall
Street Journal had expected a 0.2% uptick from May for both the
overall index and so-called core inflation.
Last month's price increases brought the CPI's cumulative growth
in June from a year earlier to 2.9%, the highest level since
February 2012. Core inflation ticked up to 2.3% in June from a year
earlier, the highest rate since January 2017.
For the second month in a row, annual inflation fully offset
workers' average hourly wage growth in June, leaving real hourly
earnings flat from a year earlier despite falling unemployment and
a generally strong economy.
The year-over-year rise in prices was led by energy commodities,
following a sharp rise in oil prices earlier this spring. The CPI
report showed gasoline prices rising a seasonally adjusted 0.5% in
June from May and 24% from a year earlier. Separate data from the
U.S. Energy Information Administration showed a gallon of regular
gasoline rose in price this spring to reach $2.89 in June, the
highest price from the month since 2014.
But prices for other goods and services rose briskly as
well.
Shelter and rent costs, which account for about a third of
overall consumer spending, rose 0.1% in June from May and were up
3.4% from a year earlier.
Medical-care services rose 0.5% in June from May and were up
2.5% on the year.
And food prices rose 0.2% in June, though the annual increase in
this category was more muted at 1.4%.
"It's the boiling frog metaphor," said Marc Hall, a 58-year-old
communications specialist in Rockville, Maryland. "You notice it a
little at a time, here and there, and then at the end of the year,
you say, 'Yeah, things went up a lot, didn't they?'"
Mr. Hall said that while he received a 2% pay raise in the past
year, he senses that his earnings haven't kept up with prices,
adding, "It's a net loss."
For many economists, accelerating inflation suggests the economy
is behaving more or less as it should after years of steady
expansion has brought the jobless rate near its lowest levels since
the 1960s. A separate measure used by the Federal Reserve to target
inflation, the personal-consumption expenditures price index,
accelerated in May to 2.3%, the highest rate in six years and 0.3
percentage points above the central bank's target.
That has bolstered policy makers' case for tightening monetary
policy. The Fed raised interest rates twice this year and penciled
in two more increases by December.
At the Fed's most recent rate-setting meeting, in June,
"participants generally
agreed that the economic expansion was progressing roughly as
anticipated, with real economic activity expanding at a solid rate,
labor market conditions continuing to strengthen, and inflation
near the Committee's objective," according to meeting minutes
released last week.
The Labor Department's report on consumer prices can be found
at: http://www.bls.gov/news.release/pdf/cpi.pdf
(END) Dow Jones Newswires
July 12, 2018 08:45 ET (12:45 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.