U.S. consumer prices advanced sharply in June, up 5.4% over a year ago. It was the biggest annual gain since 2008, as the world’s largest economy recovers from the effects of the downturn triggered by the coronavirus pandemic.
The U.S. inflation rate advanced nine-tenths of a percent in June compared to May, as the government’s Bureau of Labor Statistics confirmed Tuesday what consumers already know when they shop for groceries, cars, furniture, clothes and more: Prices are increasing.
Prices have been higher over the last few months now because the new numbers are being compared to prices that fell during the worst days of the pandemic a year ago when many businesses curtailed their operations, and in some cases, cut prices to keep their remaining customers.
But other factors are pushing prices up. Some economists say consumer prices have been driven higher because of buyer demand, with people ready to spend again after the year-long coronavirus hiatus and the inability of some businesses to keep up.
Shipping costs are also up, and some businesses have been forced to pay higher wages to lure workers — costs they are passing on to consumers.
The cost of new and used cars, and the prices for air travel, hotels, rental cars, entertainment and recreation — all of which were hit hard by the pandemic — are among the sectors in the U.S. economy with the current sharpest price increases.
Grocery shoppers have also been hit by price increases, an essential part of daily life apart from other items that often can be delayed, such as a dreamed-of vacation delayed by travel restrictions imposed by the coronavirus.
Government officials and policymakers at the country’s central bank, the Federal Reserve, have been closely watching the rise in consumer prices. But so far, they have maintained that the inflation coursing through the economy will subside as the supply chain of consumer goods improves from the pandemic period.
Prices have increased faster than Fed officials predicted earlier this year, and policymakers are weighing the best time to pull back on lending support for the recovering economy.
The U.S. economy advanced 6.4% in the first three months of the year, and economists surveyed by The Wall Street Journal expect the Commerce Department will report at the end of July that it grew by 9.1% in the April-to-June period.
