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AP
Inflation More Moderate in June
Wednesday July 18, 8:36 am ET
By Martin Crutsinger, AP Economics Writer
Consumers Get a Break at the Gas Pumps in June As Inflation Moderates
WASHINGTON (AP) -- Food costs went up again but consumers finally got a break at the gas pumps in June, helping to lower inflation to the smallest increase in five months.
The Labor Department reported Wednesday that the Consumer Price Index edged up a virtually minuscule 0.2 percent in June following a 0.7 percent surge in May, which had been the biggest jump in 20 months.
The price moderation reflected a 1.1 percent decline in gasoline prices, which pushed total energy costs down by 0.5 percent, offsetting a 0.5 percent rise in food costs.
In other economic news, construction of new homes rose in June following two straight months of declines, the Commerce Department reported.
The 2.3 percent increase in construction activity was better than the small decline that analysts had expected. It pushed home building to a seasonally adjusted annual rate of 1.434 million units.
Core inflation, which excludes the volatile energy and food sectors, was also moderate in June, rising by just 0.2 percent. Through the first six months of this year, core inflation has been rising at an annual rate of 2.3 percent, down from a 2.6 percent rate of increase in the last half of 2006, indicating that the surge in energy and food costs are not becoming embedded in more widespread inflation problems.
That will be welcome news at the Federal Reserve which is hoping that an economic slowdown will promote declining cost pressures in coming months. Fed Chairman Ben Bernanke was scheduled to deliver the central bank's midyear economic forecast to Congress on Wednesday. Financial markets expect he will continue to signal that interest rates, which have not been changed for more than a year, will remain steady for perhaps the rest of this year.
Inflation More Moderate in June
Wednesday July 18, 8:36 am ET
By Martin Crutsinger, AP Economics Writer
Consumers Get a Break at the Gas Pumps in June As Inflation Moderates
WASHINGTON (AP) -- Food costs went up again but consumers finally got a break at the gas pumps in June, helping to lower inflation to the smallest increase in five months.
The Labor Department reported Wednesday that the Consumer Price Index edged up a virtually minuscule 0.2 percent in June following a 0.7 percent surge in May, which had been the biggest jump in 20 months.
The price moderation reflected a 1.1 percent decline in gasoline prices, which pushed total energy costs down by 0.5 percent, offsetting a 0.5 percent rise in food costs.
In other economic news, construction of new homes rose in June following two straight months of declines, the Commerce Department reported.
The 2.3 percent increase in construction activity was better than the small decline that analysts had expected. It pushed home building to a seasonally adjusted annual rate of 1.434 million units.
Core inflation, which excludes the volatile energy and food sectors, was also moderate in June, rising by just 0.2 percent. Through the first six months of this year, core inflation has been rising at an annual rate of 2.3 percent, down from a 2.6 percent rate of increase in the last half of 2006, indicating that the surge in energy and food costs are not becoming embedded in more widespread inflation problems.
That will be welcome news at the Federal Reserve which is hoping that an economic slowdown will promote declining cost pressures in coming months. Fed Chairman Ben Bernanke was scheduled to deliver the central bank's midyear economic forecast to Congress on Wednesday. Financial markets expect he will continue to signal that interest rates, which have not been changed for more than a year, will remain steady for perhaps the rest of this year.
