US consumer inflation keeps six-year record in June

US consumer inflation keeps six-year record in June

US consumers
Consumers shop at the Best Buy store in Burbank, California, on Nov 24, 2017.  (Robyn Beck/AFP)

WASHINGTON: Rising prices for food, gasoline, shelter and medical care kept the annual measure of US consumer inflation at a six-year high in June, the Labour Department reported on Thursday (Jul 12).

The upward pressure on prices in the world's largest economy was apparent even excluding the volatile food and fuel categories, suggesting the underlying trend could be sustained in the coming months.

The price gains come as President Donald Trump redoubles his trade wars with major US trading partners, which economists say could soon fuel price increases.

Washing machines, for instance, saw a record price surge following the tariffs Trump imposed in January, growing by 2.8 per cent - the largest rise since the Labour Department started tracking them in December 1977.

A monthly dip in electricity and natural gas prices held down the Consumer Price Index for June, which rose 0.1 per cent compared to May, a tenth of a point slower than economists expected.

The modest rise in CPI, which tracks prices for household goods and services, came despite a 0.5 per cent jump in the index for gasoline.

ANNUAL INFLATION GAINS SPEED

Excluding food and fuel, however, the "core" CPI rose 0.2 per cent for June on higher costs for medical care, autos and recreation.

Costs for clothing, air fares and furniture fell.

For the last 12 months the CPI was 2.9 per cent higher, the same as in May which was the highest rate since February 2012.

And the core annual inflation rate was 2.3 per cent higher compared to June of last year, the largest gain since January 2017.

The Federal Reserve will keep a close eye on the rising price pressures. The central bank is expected to raise benchmark lending rates twice more this year, anticipating that years of steady growth and falling unemployment will at long last drive inflation higher.

Ian Shepherdson of Pantheon Macroeconomics said the numbers showed crosswinds, with energy services, apparel prices and hotel room rates falling while medical services, autos, food and fuel rose.

The annual core rate will likely remain close to the current 2.3 per cent in the coming months, he wrote in a research note.

"The Fed is raising rates because of the risk that the tight labour market will drive up inflation next year, not because the current picture or the immediate outlook are alarming," he said.

Meanwhile, a second Labour Department economic indicator showed inflation eating into modest worker wage growth.

Inflation-adjusted hourly earnings were flat in June when compared with the same month last year as Americans on average worked longer hours, the Labour Department said.

Source: AFP/de

Bookmark