Consumer Prices Surge by Most Since August 2008

U.S. consumer prices rose last month at the fastest pace since August 2008. The Labor Department said Tuesday that the consumer price index rose 0.9% in June, faster than the 0.6% increase in May. Prices rose 5.4% year over year, and have been trending higher every month this year.

Used car prices spiked 10.5% last month, accounting for more than one-third of the increase. Additionally, energy prices climbed 1.5% month over month and food prices rose 0.8%.

Core prices, which exclude food and energy, rose 0.9% in June, quicker than the 0.7% increase recorded in May. The 4.5% annual increase was the most since November 1991.

Higher prices seeped into large swaths of the economy as businesses have struggled to correct supply-chain bottlenecks that occurred as a result of the pandemic. Some businesses are also struggling to find workers as supplemental unemployment benefits have encouraged workers to stay home.

The Federal Reserve has insisted the price gains are “transitory” and that they will eventually return to pre-pandemic levels as the dislocations caused by the pandemic are corrected.

However, Fed Chairman Jerome Powell has admitted that timing is “uncertain.”