The Consumer Price Index for All Urban Consumers (the widely accepted measure for consumer prices) increased
0.2 percent in June when compared with May, the U.S. Department of Labor reported today.
The year-over-year inflation rate was 2.7 percent, the same rate as in May and the smallest 12-month gain since March 2006.
“We’ve seen a very steady slide in the underlying inflation rate,” David Kelly, economic adviser for Putnam Investments LLC in Boston, told Bloomberg News. “That must be a lot of comfort for the Federal Reserve.” (Federal Reserve Chairman Benjamin S. Bernanke addressed the House Financial Services Committee earlier this morning, saying that economic growth will pick up and inflation will recede.)
The increase in core prices – those excluding food and energy – was 0.2 percent month over month and 2.3 percent year over year, with energy prices falling 0.5 percent and food prices increasing 0.5 percent. A survey of 78 economists by Bloomberg had projected a consumer price increase for the month of 0.1 percent.
Housing prices rose 0.3 percent in June, following a 0.2-percent increase in each of the preceding three months. The transportation index declined 0.2 percent, as gasoline prices fell 1.9 percent from their previous peak in May. Medical care costs rose 0.2 percent to 4.0 percent above year-ago levels. Recreation was virtually unchanged in June, as were education and communication costs.
When considering changes to its benchmark interest rate, the Federal Reserve Bank carefully observes the core personal consumption expenditure price index, a measure of core inflation. Reported at the end of June, the rate increased 1.9 percent in May from a year earlier, its smallest year-over-year gain since March 2004.
The full CPI report, including regional reports, past-year revisions and an explanation of how the indexes are calculated, can be found online at www.bls.gov/cpi.
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