U.S. consumer prices in June posted their biggest monthly gain since 2012 after three months of declines punctuated by a near-record plunge in April as the pandemic sapped demand.
The consumer price index (CPI-U) jumped 0.6 percent in June from the previous month, after a 0.8 percent drop in April and a 0.1 percent drop in May, Labor Department figures released Tuesday showed (pdf). April’s monthly drop was the deepest since December 2008, the height of the financial crisis.
Just as April’s consumer price plunge was weighed down by a 20.6 percent drop in gasoline prices, June’s rebound was driven by a surge in gas prices, which rose by 12.3 percent. Still, even with that gain gasoline pump prices are 23.4 percent below where they were a year ago.
The “food at home” and medical care services categories led the charge on year-over-year price gains, with “food at home” prices surging by 5.6 percent over the last 12 months, the category’s biggest yearly increase since 2011. Medical care service prices were up 6 percent up for the last 12-month period and 0.5 percent higher than in May.
The changes in these two categories likely reflect a trend of increased health-related spending amid the pandemic and a shift towards buying groceries online.
U.S. online grocery sales rose 9 percent month-over-month in June, hitting a record $7.2 billion, according to the Brick Meets Click/Mercatus Grocery Survey. This follows a record-setting May, in which online grocery sales grew by over 24 percent month-over-month to $5.3 billion.
“Many key performance metrics related to online grocery delivery and pickup activity climbed steadily in June, as concerns about COVID-19 continued to impact the way people shop for groceries and expanded fulfillment capacity is now enabling growth,” researchers said in the June report.
The core consumer-price index, which excludes volatile food and fuel costs, picked up by 0.2 percent in June, following its largest-ever drop in April of 0.4 percent. The core inflation index rose just 1.2 percent from last June, reflecting a muted level of overall price inflation in the United States.
The core inflation figure is well below the Federal Reserve’s 2 percent target for annual gains in inflation. Economists believe given the uncertain economic outlook with COVID-19 cases climbing again in many parts of the country, inflation pressures are likely to remain low for some time to come.
Low inflation means that the Fed will have the leeway to keep providing significant support to the economy through record-low interest rates and sizable purchases of Treasury bonds and mortgage-backed securities.
The Associated Press contributed to this report.