Consumer prices rose by 0.3% last month from May, the Labor Department reported Friday, putting them 0.1% higher than a year earlier.
Taking energy out of the equation, inflation was up 2.1% in June after a 2.2% increase in May. Costs over the past 12 months increased 0.1 percent, advancing for the first time this year. These were mainly due to higher prices for vegetables, services related to retirement homes and garments respectively. Excluding volatile food and energy prices, so-called core inflation rose 0.2 percent last month.
“Inflation doesn’t have to be at their target to begin normalising interest rates, particularly as some Fed officials are concerned that long-term inflation expectations could become dislodged if the central bank is too complacent”, said Sohini Chowdhury, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. The mild price increases reflect a number of factors, including lower energy prices compared with past year and a strong dollar that makes imported goods relatively less expensive.
An improving job market is giving younger people the confidence to move out on their own, pushing rental vacancies to the lowest level in two decades, which will ensure construction and apartment costs keep increasing. The result is a decrease in the value of a nation’s currency.
The CPI is calculated by tracking the prices of “basket” goods and comparing it to their prices in a base year.
Consumers benefitted from a slight reduction in the cost of clothes and cars. About 650,000 prices are checked each year across Canada.
Prices of eggs have soared because of the widespread outbreak of the avian flu at some of the largest chicken farms in the U.S.
As nations borrow money from each other, prices can rise as a response to interest and national debt.
The yield on Treasury securities was little changed as the increase in inflation was subdued enough to strengthen the Fed’s resolve to raise borrowing costs only gradually. However, there is disagreement among economists as to how the money supply affects inflation.
Overall, food prices posted their biggest increase since September. In the picture above, a woman protests hyperinflation by carrying around worthless notes in Serbia during its hyperinflation crisis in 1992.