U.S. Consumer Price Growth Exceeds Estimates In July
August 12 2020 - 4:14AM
RTTF2
Consumer prices in the U.S. increased by more than anticipated
in the month of July, according to a report released by the Labor
Department on Wednesday.
The Labor Department said its consumer price index climbed by
0.6 percent in July, matching the increase seen in June. Economist
had expected consumer prices to rise by 0.3 percent.
The stronger than expected consumer price growth was partly due
to a continued spike in energy prices, which surged up by 2.5
percent in July after soaring by 5.1 percent in June. Gasoline
prices continued to lead the way higher.
However, the jump in energy prices was partly offset by a
pullback in food prices, which fell by 0.4 percent in July after
rising by 0.6 percent in July. Prices for food at home tumbled by
1.1 percent.
Excluding food and energy prices, core consumer prices still
advanced by 0.6 percent in July after inching up by 0.2 percent in
the previous month. Core prices were expected to edge up by another
0.2 percent.
Core consumer prices showed their biggest increase since January
of 1991, partly reflecting another jump in prices for motor vehicle
insurance, which skyrocketed by 9.3 percent in July after spiking
by 5.1 percent in June.
Prices for shelter, communication, used cars and trucks, and
medical care also increased in July, while prices for recreation
declined.
The report also said the annual rate of consumer price growth
accelerated to 1.0 percent in July from 0.6 percent in June. Core
prices were up 1.6 percent year-over-year following a 1.2 percent
increase in the previous month.
Paul Ashworth, Chief U.S. Economist at Capital Economics, said
the increase in consumer prices "should end any speculation that
the pandemic-related slump in demand will quickly push the economy
into a deflationary spiral."
"But this is not a sign that the U.S. is instead about to
experience a bout of much high inflation because of supply
restrictions," Ashworth said. "It mainly reflects a recovery in the
prices of goods and services that were most affected during the
early stages of the pandemic."
On Tuesday, the Labor Department released a separate report
showing U.S. producer prices also climbed by more than expected in
the month of July.
The Labor Department said its producer price index for final
demand rose by 0.6 percent in July after dipping by 0.2 percent in
June.
Excluding food and energy prices, core producer prices climbed
by 0.5 percent in July after falling by 0.3 percent in June.
Economists had expected core prices to inch up by 0.1 percent.
Compared to the same month a year ago, producer prices in July
were down by 0.4 percent following a 0.8 percent decrease in
June.
The annual rate of growth in core producer prices accelerated to
0.3 percent in July from 0.1 percent in the previous month.
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