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US consumer prices shoot up
By Martin Crutsinger |
July 16, 2009, Thursday
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Print Edition
Print Edition
CONSUMER prices in the United States shot up last month by the largest amount in 11 months, reflecting the biggest jump in gasoline prices in nearly five years.
The Commerce Department yesterday said inflation at the consumer level rose 0.7 percent last month, slightly higher than the 0.6-percent increase economists were expecting. It was the biggest one-month gain since a 0.7-percent increase in July last year.
The big jump was seen as a temporary blip, however. Inflation is not expected to be a problem any time soon given a severe recession which is keeping a lid on wage pressures.
Underscoring the low threat of accelerating inflation, prices last month compared with a year ago were actually down by 1.4 percent, the biggest year-on-year decline in nearly six decades.
Core inflation, which excludes food and energy, posted a moderate 0.2-percent rise last month, slightly higher than the 0.1-percent rise that economists had expected.
The absence of an inflation threat has allowed the Federal Reserve to drive a key interest rate to a record low in an effort to fight a severe recession which is already the longest since World War II. The central bank pushed its target for the federal funds rate to near zero in December, and it is expected to remain there until the nation's unemployment rate, currently at a 26-year high of 9.5 percent, stops rising.
The 0.7-percent jump in the Consumer Price Index last month followed three months of moderation, including a small 0.1-percent rise in May.
The upward surge was driven by a 7.4-percent rise in energy prices, reflecting a 17.3-percent increase in gasoline prices, the biggest one-month jump in gas prices since a 20.9-percent spurt in September 2005 after Hurricane Katrina had shut Gulf Coast refineries.
Food costs edged up a small 0.1 percent last month, held back by a big drop in the cost of dairy products.
For last month, new car prices jumped by 0.7 percent and clothing costs were also up 0.7 percent. However, those gains were offset by a 0.6-percent drop in airline fares. Price increases were also moderate in the health area with medical care edging up by 0.2 percent, the smallest gain in three months.
The Commerce Department yesterday said inflation at the consumer level rose 0.7 percent last month, slightly higher than the 0.6-percent increase economists were expecting. It was the biggest one-month gain since a 0.7-percent increase in July last year.
The big jump was seen as a temporary blip, however. Inflation is not expected to be a problem any time soon given a severe recession which is keeping a lid on wage pressures.
Underscoring the low threat of accelerating inflation, prices last month compared with a year ago were actually down by 1.4 percent, the biggest year-on-year decline in nearly six decades.
Core inflation, which excludes food and energy, posted a moderate 0.2-percent rise last month, slightly higher than the 0.1-percent rise that economists had expected.
The absence of an inflation threat has allowed the Federal Reserve to drive a key interest rate to a record low in an effort to fight a severe recession which is already the longest since World War II. The central bank pushed its target for the federal funds rate to near zero in December, and it is expected to remain there until the nation's unemployment rate, currently at a 26-year high of 9.5 percent, stops rising.
The 0.7-percent jump in the Consumer Price Index last month followed three months of moderation, including a small 0.1-percent rise in May.
The upward surge was driven by a 7.4-percent rise in energy prices, reflecting a 17.3-percent increase in gasoline prices, the biggest one-month jump in gas prices since a 20.9-percent spurt in September 2005 after Hurricane Katrina had shut Gulf Coast refineries.
Food costs edged up a small 0.1 percent last month, held back by a big drop in the cost of dairy products.
For last month, new car prices jumped by 0.7 percent and clothing costs were also up 0.7 percent. However, those gains were offset by a 0.6-percent drop in airline fares. Price increases were also moderate in the health area with medical care edging up by 0.2 percent, the smallest gain in three months.
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