The Labor Department released a highly anticipated report on Wednesday showing U.S. consumer prices surged by more than expected in the month of June.
The report showed the consumer price index shot up by 1.3 percent in June after jumping by 1.0 percent in May. Economists had expected consumer prices to leap by 1.1 percent.
With the bigger than expected monthly increase, the annual rate of consumer price growth accelerated to 9.1 percent in June, reflecting the fastest growth since November 1981.
Economists had expected the annual rate of consumer price growth to accelerate to 8.8 percent in June from 8.6 percent in May.
Michael Pearce, Senior U.S. Economist at Capital Economics, said the data “nails on” another 75 basis point interest rate hike by the Federal Reserve later this month.
“But, with commodity prices falling sharply since then and wage growth moderating in recent months, the outlook for inflation does not look as bleak as it did a month ago,” Pearce said. “Accordingly, speculation about a 100bp hike this month looks to be misplaced.”
The monthly surge in consumer prices came as energy prices soared by 7.5 percent in June after spiking by 3.9 percent in May. Gasoline prices led the way higher, skyrocketing by 11.2 percent.
Food prices also continued to see notable growth, jumping by 1.0 percent in June after shooting up by 1.2 percent in the previous month.
Excluding the increases in prices for food and energy, core consumer prices advanced by 0.7 percent in June after climbing by 0.6 percent in May. Core prices were expected to rise by another 0.6 percent.
The slightly bigger than expected increase in core prices partly reflected higher prices shelter, used cars and trucks, medical care, motor vehicle insurance, and new vehicles.
While the annual rate of core consumer price growth slowed to 5.9 percent in June from 6.0 percent in May, the rate of growth was expected to decelerate to 5.7 percent.
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