WASHINGTON (Reuters) – US consumer prices rose the most in nearly eight years in June when companies reopened, but the underlying trend suggested that inflation would remain silent and allow the Federal Reserve to continue to inject money into the economy. In crisis.
FILE PHOTO: A merchant works inside his retail store as New York City Phase One reopening continues during the outbreak of coronavirus disease (COVID-19) in the Brooklyn district of New York City. , New York, United States, June 9, 2020. REUTERS / Shannon Stapleton / File Photo
The Labor Department said Tuesday that its consumer price index rose 0.6% last month, the biggest gain since August 2012, after declining 0.1% in May. The increase, which ended with three consecutive months of declines, was fueled by increases in gasoline and food prices.
In the 12 months to June, the CPI rose 0.6% after gaining 0.1% in May, which was the smallest year-on-year increase since September 2015.
Economists polled by Reuters had forecast that the CPI would rise 0.5% in June and advance 0.6% yoy.
The companies have reopened after closing in mid-March to curb the spread of COVID-19. But new cases of respiratory illness have emerged in much of the country, prompting some states to redial or pause reopens.
The economy fell into recession in February.
The Fed is injecting money into the economy through extraordinary measures, including large-scale asset purchases and channeling of loans to companies. Separately, the government has provided nearly $ 3 trillion in fiscal stimulus, contributing to a record monthly budget deficit in June.
It is feared that the unprecedented stimulus may fuel inflation. But with a record 33 million people with unemployment benefits, economists expect inflation to remain benign.
Excluding volatile food and energy components, the CPI rose 0.2% in June after falling 0.1% in May. The increases in clothing and medical care costs were offset by a moderation in rental inflation.
The so-called underlying CPI had declined for three consecutive months for the first time since the series began in 1957. In the 12 months to June, the underlying CPI rose 1.2%, matching the gain for May.
The Fed tracks the Personal Consumption Expense Price Index (PCE) for its inflation target of 2%. The PCE core price index rose 1.0% yoy in May, the smallest advance since December 2010. Data from the June PCE core price index will be released later this month.
Lucia Mutikani’s report; Editing by Andrew Heavens and Andrea Ricci
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