US consumer prices jump in July, pushed by autos
Aug 13, 2020 - 07:03 AM
WASHINGTON — US inflation is picking up pace as consumer prices jumped 0.6 percent again in July, mirroring the June increase, and driven up by new and used car prices, government data showed Wednesday.
After plunging in the first two months of the coronavirus pandemic, the consumer price index (CPI) has roared back, posting a gain that was double what economists had been expecting, the Labor Department reported.
Falling oil prices had been keeping a lid on the overall price gains, but the energy index rose 2.5 percent last month, according to the report.
Food prices however continue to decline, falling 0.4 percent compared to June.
Excluding the volatile food and energy components, the “core” CPI gained 0.6 percent in July — the biggest increase in this closely-watched measure since January 1991.
Overall inflation gained 1.0 percent over the past 12 months, with so-called “core” inflation up 1.6 percent — still far below the Federal Reserve’s 2.0 percent target.
With businesses reopening after months of COVID-19 shutdowns, the world’s largest economy seems to have avoided a spiral of falling prices, which would deter investment and potentially slow the recovery.
“Consumer prices continue to rebound from the pandemic shock, but there’s still a long way to go to a full recovery,” said Oren Klachkin of Oxford Economics.
Klachkin noted that the Fed’s 2.0 percent inflation goal will remain elusive “until a vaccine or therapeutic is found and virus fear has faded.”
New vehicle prices rose 0.8 percent in July and new cars jumped 2.3 percent in the 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 fares increased 5.4 percent.
Meat, poultry and fish prices plunged 2.8 percent, while dairy products dropped 0.8 percent, but food in restaurants rose 0.5 percent.