US inflation picked up again when consumer prices jumped 0.6 percent in July, reflecting the June rise, and fueled by new and used car prices, government data showed Wednesday.
After suffering from the coronavirus pandemic in the first two months, the consumer price index (CPI) roared back, posting a profit that was double what economists had expected, the Labor Department reported.
Falling oil prices had kept a lid on overall price gains, but the energy index rose 2.5 percent last month, according to the report.
However, food prices continue to fall, 0.4 percent down from June.
Excluding the volatile food and energy components, the “core” CPI rose 0.6 percent in July – the largest increase of this closely sought measure since January 1991.
Total inflation rose 1.0 percent in the past 12 months, with so-called “core” inflation up 1.6 percent – still well below the Federal Reserve’s 2.0 percent target.
With companies reopening after months of COVID-19 shutdowns, the world’s largest economy appears to have prevented a spiral of falling prices, which could limit investment and potentially delay recovery.
“Consumer prices are rebounding from the pandemic shock, but there is still a long way to go to fully recover,” said Oren Klachkin of Oxford Economics.
Klachkin notes that the Fed’s 2.0 percent inflation target remains unavoidable “until a vaccine is found to be therapeutic and fears of viruses have disappeared.”
Prices for new cars rose 0.8 percent in July and new cars jumped 2.3 percent a month, according to the data.
Rent rose just 0.2 percent, and medical services were up 0.5 percent – the same increase posted in June – while airline rates rose 5.4 percent.
Meat, poultry and fish prices fell 2.8 percent, while dairy products fell 0.8 percent, but food in restaurants rose 0.5 percent.
hs / sst
