The consumer price index increased 0.7 percent after a 0.1 percent advance in May, the Labor Department said today in Washington. Excluding food and energy costs, the so-called core index rose 0.2 percent. Compared with a year earlier, prices fell 1.4 percent, the biggest drop since January 1950.
Declines in consumer spending and business investment are forcing companies to boost incentives or keep a lid on prices in order to move merchandise, and preventing them from passing higher energy costs on to customers. A surge in gasoline costs in recent months is now abating, indicating inflation may moderate as the year progresses.
For the core index, prices were up 1.7 percent from a year earlier. That compares with a 1.8 percent increase in the 12 months ended in May.
Energy costs increased 7.4 percent in June. Gasoline prices soared 17 percent.
Labor said yesterday that a 6.6 percent increase in the cost of energy led to wholesale prices gaining twice as much as anticipated. Gasoline soared 18.5 percent and home heating oil rose 15.4 percent, yesterday’s report showed.
Food prices, which account for about a seventh of the CPI, were unchanged in June, after a 0.2 percent drop in May.
The CPI is the broadest of the three monthly price gauges from Labor because it includes goods and services. The cost of goods imported into the U.S. rose 3.2 percent in June, the government said last week. Wholesale prices increased 1.8 percent, Labor said yesterday.
Almost 60 percent of the CPI covers prices consumers pay for services ranging from medical visits to airline fares and movie tickets.
The increase in the core CPI was led by gains for automobiles. New and used vehicle prices rose by 0.4 percent. Car costs may decline in coming months as carmakers slash prices or increase incentives to revive demand and reduce inventories, analysts said.
Rents, which make up almost 40 percent of the core CPI, rose. Owners-equivalent rent, a category used to track housing costs, increased 0.1 percent, the same as in the previous two months.