U.S. Consumer Prices Rise 0.5% In June Amid Jump In Gas Prices

(RTTNews) - Consumer prices in the U.S. rose by a little more than expected in the month of June, according to a report released by the Labor Department on Tuesday, with the price growth largely due to a jump in gasoline prices.

The Labor Department said its consumer price index rose by 0.5 percent in June after inching up by 0.1 percent in May. Economists had been expecting prices to increase by 0.4 percent.

The jump in gas prices accounted for about two-thirds of the increase in consumer prices, with gas prices surging up by 6.3 percent in June after coming in unchanged in May.

With other energy prices turning in a mixed performance, the energy index rose by 3.4 percent in June after climbing by 0.4 percent in May.

The report also said food prices edged up by 0.2 percent in June after dipping by 0.2 percent in the previous month. The increase reflected a rebound in prices for food at home.

Excluding food and energy prices, the core consumer price index inched up by 0.2 percent in June, matching the increase seen in the previous month as well as economist estimates.

The Labor Department said the modest increase by the core index largely reflected higher prices for shelter, medical care, and apparel.

Compared to the same month a year ago, the consumer prices index rose by 1.8 percent in June, reflecting a notable acceleration from the 1.4 percent growth seen in May.

Meanwhile, the annual rate of core consumer price growth slowed to 1.6 percent in June from 1.7 percent in May, showing the slowest rate of growth since June of 2011.

"The fact that core inflation fell despite the rebound in medical prices could … boost the argument that the decline is more permanent," said Paul Dales, Senior U.S. Economist at Capital Economics. "Our view is that a lot of it is due to the delayed impact of previous declines in commodity prices."

"But now that commodity prices have stabilized, there is less scope for core inflation to fall much further," he added. "As such, we think the Fed can afford to look through the current low rate of core inflation and continue to edge closer towards tapering QE3."

Last Friday, the Labor Department released a separate report showing that producer prices rose by more than expected in June amid a jump in gas prices.

The Labor Department said its producer price index rose by 0.8 percent in June following a 0.5 percent increase in May. Economists had been expecting the price growth to match the increase seen in the previous month.

The core producer price index edged up by 0.2 percent in June after inching up by 0.1 percent in each of the two previous months. Core prices had been expected to tick up by 0.1 percent for the third straight month.

Compared to the same month a year ago, producer prices rose by 2.5 percent in June versus the 1.7 percent increase in May. The annual price growth in June was the fastest since a 2.8 percent increase in March of 2012.

Core producer prices increased by an annual rate of 1.7 percent in June, unchanged compared to the annual rate of growth seen in the previous month.