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Consumer Prices Climb Faster Than Expected to Highest Level Since 2008

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Consumer Prices

pInflation accelerated more than economists anticipated in June, owing mainly to higher prices of used vehicles during the period.

Source: Bloomberg

VCR is down 0.29%.

Inflation posted a yearly gain of 5.4% and a monthly jump of 0.9%. This is the highest since June 2008’s 1.0% and tops the median forecast of 4.9% for the year-on-year increase and 0.5% for the month-on-month.

Economists believe that the latest figures reinforce the Federal Reserve’s view that the inflation uptick is transitory, given the outliers which posted outsized increases.

Prices of used cars and trucks grew 10.5% in June to mark a record-high. Outsize increases were also seen year-on-year due to base effects as lockdowns were imposed the same month in 2020.

Fed Chair Jerome Powell has maintained that inflation is transitory as the economy reopens, but noted that bottlenecks and other constraints could limit supplies and drive pressures longer than expected.

Outsize increases were also seen in hotel stays, car rentals, apparel, and airfares.

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