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Consumer prices up slightly in June, but gasoline prices spike

Gasoline Prices
Gasoline Prices

America’s cost of living eased a little bit in June, according to official statistics reported by the Labor Department and published by Marketwatch on July 22, 2014.

The consumer Price Index, or CPI, increased 0.3% in June, 2014 a smaller increase compared to the 0.4% increase in May. One- tenth of a percent decline many not seem like much, but the June increase represents an annualized rate of 3.6%, which is significantly less than the 4.8% annualized CPI in May.

Gasoline led the way. With a 3.3% jump, gasoline accounted for two- thirds of the total increase in June prices. Food, in contrast, barely budged in June, increasing only 0.1% from the previous month.

Other indices were mixed. Apparel prices increased by 0.5% in June while shelter increased just 0.2%. New and used cars actually dropped in price during June, 2014.

The smaller CPI increase in June, 2014 and the year-over- year increase of just 2.1 percent for the past 12 months has helped ease inflationary worries. The spike in food prices in May concerned consumers and economists, but the easing of price increases in June on staple goods and services has helped alleviate these fears.

Still, strong job growth could lead to higher demand and higher prices in the coming months. This will certainly play a large decision- making role when the Fed meets next week to discuss the economy and trends. It could lead to a hike in interest rates in the coming year if the economy continues to grow and inflation follows suit.

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