Gas, eggs drive US consumer prices up 0.3 percent in June(Read article summary)
US consumer prices increased 0.3 percent in June, the Labor Department announced Friday. The rise in prices could support the Fed's intention to raise long-term interest rates before the end of 2015.
US consumer prices increased for the fifth consecutive month in June, the Labor Department said Friday. Gas prices, which have been straying away from usual price patterns, and a shortage of eggs drove the consumer price index (CPI) up 0.3 percent in June.
Since February 2015, consumer prices have gone up 1.2 percent, after the CPI dropped 1.0 percent in December 2014 and January 2015. June’s increase put inflation back into positive territory at 0.1 percent. Core inflation, which excludes the energy and food indexes, has risen 1.8 percent since last year, fueling economists’ expectations of US interest rates increasing later this year.
“Recent comments from Fed chair Janet Yellen point to the growing likelihood of interest rates starting to rise later this year, stressing that the Fed is keen to start the process of normalizing monetary policy after more than six years of near-zero interest rates,” Chris Williamson, chief economist at London-based financial services firm Markit, wrote in an emailed comment. A rate hike could come as early as September, he added, though policymakers may decide against raising interest rates if other economic indictors, such as retail sales and wage growth, continue to show signs of weakness.
Goods across the board, including shelter and transportation, rose in price. The energy index – which includes gasoline, electricity, and natural gas – increased for the second straight month, rising 1.7 percent in June. The biggest energy gain came at the pump; gas prices rose 3.4 percent in June after jumping 10.4 percent in May. Gas prices this year have been on a steady climb, though they remain historically low. On June 15,the national average for gas prices reached its highest peak of the year at $2.80 per gallon, but it has slid down to $2.76, according to AAA. Gas prices hovered just about $2 back in January, but current prices look like a bargain compared to last year’s $3.59 per gallon average.
The food index rose 0.3 percent in June after staying stagnant in April and May. The cost of groceries rose for the first time since February after months of price declines. A shortage of eggs linked to a recent avian flu outbreak caused prices to surge 18.3 percent in June, the biggest hike in egg prices since 1973. Over the past 12 months, they've increased nearly 22 percent. More than 49 million chickens and turkeys died or were euthanized in 15 states this spring on account of the flu, according to the Associated Press.
In addition to higher prices, the egg fiasco has sparked a wave of activism and reforms. Earlier in July, General Mills announced it is committed to transitioning to cage-free eggs as part of a program to improve its animal welfare standards. Other food corporations, such as Dunkin’ Donuts, Burger King, and Subway have started to phase into cage-free eggs to appeal to consumers and animal welfare activists. But not every company has began to transition to cage-free eggs – over the past few weeks, celebrities like Brad Pitt, Ryan Gosling, and Bill Maher have called for Costco to sell cage-free eggs.
“Nearly a decade ago, Costco indicated that its next step on this issue would be creating a timeline for getting those cages out of your egg supply,” Mr. Pitt wrote in an open letter to CEO Craig Jelinek on Thursday. “And yet today, you appear to have made no progress at all—even as you have set timelines for getting pigs and calves out of cages.”