WASHINGTON (AP) — Consumers paid more for gas, food and clothes last month, pushing prices up by the most
since the spring.
The
Labor Department said Thursday that the Consumer Price Index rose 0.5
percent in July. That followed a drop of 0.2 percent in June.
Gas prices accounted for much of the swing. They increased a seasonally adjusted 4.7 percent after
dropping sharply in June.
The
core index, which excludes volatile food and energy, rose 0.2 percent.
That’s below the 0.3 percent rise in each of the previous two months.
Over
the past 12 months, prices have risen 3.6 percent. That’s equal to the
12-month increase in May and June. But core prices over the past 12
months have gone up 1.8 percent — the largest increase in two years.
Clothing
prices rose 1.2 percent in July. That was the third straight increase,
reflecting higher cotton prices. Over the past 12 months, clothing costs
have risen 3.1 percent, the largest annual increase since July 1992.
Higher rents and pricier hotel rooms have pushed the cost of housing up by the most in three years.
Food prices rose 0.4 percent. The cost of meat, dairy, coffee and fruits and vegetables all increased.
The
Labor Department said Wednesday that core wholesale prices rose 0.4
percent in July, the most in six months. That’s twice the increase in
core consumer prices. The difference suggests that retailers are
reluctant to pass on all their higher costs to consumers. That could
restrain inflation going forward.
Higher gas and food costs sent
consumer prices sharply higher this year, stoking inflation fears. But
core prices, which exclude volatile food and energy costs, have been
much tamer. The 1.8 percent annual increase reported in July is within
the Federal Reserve’s informal target range of between 1.5 percent and 2
percent.
Fed policymakers expect core consumer inflation to average between 1.5 percent and 1.8 percent this year.
Some
inflation can be healthy for the economy because it encourages people
to spend and invest rather than sitting on their cash. More spending
drives corporate growth, which makes businesses more likely to hire
people.
Oil and gas prices have fallen in recent weeks, in
response to concerns that growth in the United States and Europe will be
weak this year. Americans are also driving less, reducing demand for
gasoline.
Falling oil and gas prices should help keep inflation in
check. The average nationwide price of gas fell to $3.58 a gallon
Wednesday, down about 9 cents from a month earlier.
Lower
inflation gives the Federal Reserve more leeway to keep interest rates
low and potentially engage in other efforts to boost the economy.
Last
week, Fed policymakers said they will keep its benchmark short-term
rate at nearly zero at least until mid-2013. Previously, the central
bank had never given a clear time frame. It hopes the certainty of low
rates will encourage consumers and businesses to borrow and spend more.
Copyright 2011 The Associated Press.
