In June, the Consumer Price Index (CPI), which measures fluctuations in the cost of common goods and services, rose 0.9%. That’s the largest single-month increase in 13 years. Meanwhile, over the past 12 months, consumer prices rose 5.4%, which marks the biggest jump in annual inflation in almost 13 years.
These jumps in the CPI were according to data from the Labor Department released Tuesday. The core increased 4.5% from June 2020, the largest advance since November 1991, topping all forecasts and showing higher costs associated with the economy’s reopening continue to fuel inflationary pressures.
Used vehicle accounted for one-third of the CPI gain last month, the agency said. Prices paid for new and used vehicles rose from a month earlier by the most on record. These two categories each make up less than 4% of the overall CPI. The outsize increase in the June CPI was also driven in large part by the pricing rebound in categories associated with a broader reopening of the economy, including hotel stays, car rentals, apparel and airfares.
The lifting of pandemic restrictions is propelling purchases of service like travel and transportation, another contributor to inflationary pressures.
The cost of food away from home jumped 0.7% on a month-over-month basis, the largest gain since 1981. Shelter costs, which are a more structural component of the CPI, and are about a third of the overall index, rose 0.5% in June, the most since October 2005. The gain was contributed to a 7.9% jump in hotel stays.
With inflation, from the Fed “we are told the story is transitory but the increases are going faster and for longer,” John Ryding, chief economic advisor at Brean Capital said on Bloomberg Television. “We just had a monthly increase that was about double what was expected.”
Most consumers are anticipating higher prices to continue for the near future, and possibly throughout the entire year.
