Con­sumer price in­dex jumps as gas costs rise

Los Angeles Times - - BUSINESS BEAT - By Jim Puz­zanghera jim.puz­zanghera@latimes.com

WASHINGTON — Con­sumer prices in May had their big­gest in­crease since 2013 as ga­so­line costs jumped sharply af­ter months of declines, the La­bor Depart­ment said Thurs­day.

The con­sumer price in­dex, which cov­ers a va­ri­ety of goods and ser­vices, rose 0.4% com­pared with a 0.1% in­crease the pre­vi­ous month. May was the fourth straight month that the in­dex rose, and those in­creases fol­lowed three straight monthly declines caused by lower oil prices.

The re­ver­sal in gas prices has in­creased inf la­tion­ary pres­sure. The gas price in­dex rose 10.4% in May af­ter de­clin­ing 1.7% the pre­vi­ous month.

The in­crease in gas prices was the main fac­tor in the over­all rise of the con­sumer price in­dex, a closely watched mea­sure of in­fla­tion. Tak­ing out volatile energy and food prices, so-called core prices rose 0.1%, the small­est in­crease since De­cem­ber. Food prices were un­changed in May for the sec­ond straight month.

A steep de­cline in oil prices that be­gan last year has pushed inf la­tion ex­tremely low. De­spite the rise in May, gas prices were down 25% from a year ear­lier.

For the 12 months ended May 31, over­all con­sumer prices were un­changed, the La­bor Depart­ment said. Still, that’s an im­prove­ment over the 0.2% an­nual de­cline through April.

Fed­eral Re­serve pol­i­cy­mak­ers are watch­ing in­fla­tion as they de­cide when to raise a key short-term in­ter­est rate for the first time since 2006. The Fed wants about 2% an­nual in­fla­tion.

The Fed uses a dif­fer­ent an­nual in­fla­tion mea­sure, based on per­sonal con­sump­tion ex­pen­di­tures, that was up 0.1% in April, the latest data avail­able.

Ex­clud­ing food and energy, core con­sumer prices were up 1.7% in the 12 months ended May 31. The fig­ure was down from 1.8% in the pe­riod through April.

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