Prices paid by consumers in the United States climbed in June, despite the first decline in energy prices since February, as rising shelter costs continued to spur inflation. The data increase the chances the U.S. Federal Reserve will boost interest rates next month.
June consumer prices increased by 0.2%, after climbing 0.4% in May, the U.S. Labor Department said. Core consumer prices, which exclude food and energy items, grew 0.3% in June for the fourth consecutive month at that pace.
The core increase was just above Wall Street expectations while the overall consumer prices were in line with expectations. Economists surveyed had projected a 0.2% gain in the main number and a 0.2% rise in the core.
Today’s CPI report showed prices are 4.3% higher than a year ago with core prices rising by 2.6% during the same time frame. During the past three months overall consumer prices have risen 5.1% and have been up by 3.6% when food and energy prices are excluded.
Energy prices fell by 0.9% in June after rising 2.4% in May while food prices gained 0.3% after a 0.2% rise in May. Natural gas prices declined by 5.7% and gasoline prices fell by 1.0%.
Housing prices, which account for about 40% of the overall index, were up 0.2% in June. Airfares continued to climb, rising by 3.1% the largest monthly gain in more than a year. Transportation prices declined by 0.2% on a 0.1% drop in car prices. Medical care prices advanced by 0.3% while education and communication prices also rose by 0.3%. Clothing prices were unchanged.
Separately, the Labor Department said real average weekly earnings rose 0.6% in June compared to May.
Meanwhile, June housing starts decreased by 5.3% to a seasonally adjusted 1.850 million annual rate, the U.S. Commerce Department said today. Construction in May rose 6.6% to 1.953 million, revised from the original estimate of a 5.0% climb to 1.957 million.
Economists had forecast housing starts falling3.4% to a 1.890 million annual rate. Inventories of new homes are near a record level. The latest data showed the number of new homes on the market at the end of May was 556,000.
The Commerce Department reported permits for future building also slid. Permits dropped by 4.3% in June to a 1.862 million annual rate. Permits had been projected by economists to slip 1.8% to 1.910 million. Permits fell 1.4% to 1.946 million in May. The last time permits rose was in January.