In a statement on Tuesday, the Labor Department reported that its consumer price index rose by 0.6% last month, the largest net monthly gain since August 2012. The price increase follows an easing of 0.1% in May, and exceeds the rise of 0.5% predicted by economists polled by Reuters.
The increase coincides with the reopening of non-essential retailers and other businesses throughout the country, and continued anti-coronavirus stimulus spending that has driven the US budget deficit as high as $3 trillion over the past 12 months.
A hike in the cost of gasoline accounted for over half of the resurgence in consumer spending, with energy prices as a whole rising by 5.1% and gasoline itself rising by 12.3%. However, gas pump prices remain 23.% lower than they were a year ago.
Having risen by 0.7% in May, food prices also saw a further increase of 0.6% in June, contributing to the shift in the Labor Department’s index. Core inflation also rose by 1.2%, far below the Federal Reserve’s target of 2% in annual inflation gains.
It is yet unclear how the consumer price index will be affected by the decision of several states to reverse their reopening plans in late June and early July following a resurgence in COVID-19 cases.
The US economy has been struck dramatically by the COVID-19 pandemic, with the economy entering a recession in February and April seeing the greatest single-month fall in consumer spending since the 2008 financial crisis.
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