Inflation continued to spike in June, rising at the fastest pace in nearly 13 years amid a sustained surge in used car costs and spikes in both food and energy, the Labor Department reported Tuesday.
The consumer price index rose 5.4% year-on-year, the largest increase since shortly before the financial crisis. Economists polled by Dow Jones had expected an increase of 5%.
Excluding volatile food and energy prices, core CPI rose 4.5%, the strongest move for the metric since September 1991 and well above the 3.8% estimate.
On a monthly basis, both headline and core prices rose 0.9% compared to an estimate of 0.5%.
Stock market futures fell on the report, while the sharp fall in government bond yields was mixed.
Inflation has escalated due to a number of factors including supply chain bottlenecks, exceptionally high demand as the Covid-19 pandemic subsides, and year-on-year comparisons with a time when the economy struggled in the first few months of the year to reopen crisis.
Federal Reserve and White House policymakers expect current pressures to ease, despite central bank officials admitting that inflation is higher and perhaps more permanent than they expected.
Much of the price pressure came from sectors particularly hard hit by the shutdown – used car prices, airfares and transportation costs, to name just three.
This was also the case last month, when used car and truck prices rose 10.5%, accounting for more than a third of all gains in the price index.
Food and energy prices also rose significantly by 0.8% and 1.5%, respectively.
However, apartment and lodging prices continue to rise, reinforcing the notion that inflation may linger for a while.
According to a New York Fed poll released Monday, consumers are seeing an overall price increase of 4.8% over the next 12 months, although a separate Bank of America poll on Tuesday showed that professional investors were more likely to believe that the Inflation will be temporary.
This is the latest news. Please check back here for updates.
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