US Consumer Prices Rose 0.6% in July

Gasoline prices continued to climb last month, while food prices fell.

Gas pump in Brandon, Miss., March 31, 2020.
Gas pump in Brandon, Miss., March 31, 2020.
AP Photo/Julio Cortez, File

WASHINGTON (AP) β€” U.S. consumer prices jumped 0.6% in July as gasoline prices continued to rise.

The Labor Department reported Wednesday that the increase last month in its consumer price index matched a 0.6% rise in June. The uptick was about twice what economists expected. But inflation remains in check: Consumer prices are up just 1% over the past year.

Gasoline prices rose 5.3% from June to July but are down 20.3% in the past 12 months as the coronavirus recession kept many Americans from driving.

Food prices dipped 0.4%, the first drop since April 2019. Grocery prices dropped 1.1% while the cost of dining out rose 0.5%.

Excluding volatile food and energy prices, prices surged 0.6% last month from June β€” the biggest monthly increase since January 1991. Still, so-called core inflation is only up 1.6% from a year earlier.

Consumer spending rebounded strongly in June as states began to ease lockdowns β€” though a recent surge in coronavirus cases has force some business to delay or cancel plans to reopen.

β€œJuly’s data confirmed that inflation followed the sharp rebound in consumer spending this summer stabilized the downward trend in prices," said a research note from Contingent Macro Advisors. β€œThis report was not enough to turn the inflation trend higher, but it helped to alleviate near-term concerns about deflationary scenarios for the economy.β€˜β€™

Deflation, falling prices, can hurt the economy by nudging consumers to delay spending because they believe prices will be lower in the future.

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