Shoppers celebrate Ross Stores Inc. and Target Corp. store locations in San Francisco, California, US, on Thursday, August 6, 2020.
David Paul Morris | Bloomberg | Getty Images
U.S. consumer prices jumped 0.6% in July as gasoline prices continued to rise.
The Department of Labor reported on Wednesday that the increase last month in its consumer price index corresponds to an increase of 0.6% in June. The uptick was about twice what economists expected. But inflation remains in control: Consumer prices have risen just 1% over the past year.
Gasoline prices rose 5.3% from June to July, but have fallen 20.3% in the past 12 months, as the coronavirus recession has driven many Americans to drive.
Food prices dipped 0.4%, the first drop since April 2019. Supermarket prices fell 1.1%, while food costs rose 0.5%.
Excluding volatile food and energy prices, prices rose 0.6% in the last month of June – the largest monthly increase since January 1991. However, so-called core inflation is only 1.6% higher than a year earlier.
Consumer spending fell sharply in June when states began reducing lockdowns – although a recent rise in coronavirus cases has forced some companies to reopen or cancel plans.
“July data confirmed that inflation following the sharp decline in consumer spending this summer stabilized the downward trend in prices,” said a research note from Contingent Macro Advisors. “This report was not enough to drive the inflation trend higher, but it did help reduce long-term concerns about deflationary scenarios for the economy.” ‘
Deflation, falling prices, could hurt the economy by prompting consumers to delay spending because they believe prices will be lower in the future.
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