U.S. consumer prices increased in June after gasoline costs soared, contributing to two-thirds of the 0.3 percent rise in the Consumer Price Index, reported the Labor Department on Tuesday. This compares with the 0.4 percent gain in May.
The CPI rose 2.1 percent in the year through June, matching the figures in May. The inflation is gradually building up as the economic recovery gains momentum, giving Federal Reserve officials room to breathe after they had earlier voiced concern that the inflation remains too low, reported Reuters.
Gasoline prices surged 3.3 percent, the most in a year, compared with a 0.7 percent increase in May. Though electricity prices grew, they were slower than the 2.3 percent gain recorded in May. The cost of food rose 0.1 percent last month, the slowest pace since January.
The core CPI, which is adjusted for the volatile food and energy costs, jumped 0.1 percent, compared with an increase of 0.3 percent in May. In the year to June, the core CPI grew 1.9 percent after increasing by 2.0 percent in May. The core CPI was weighed by a drop in prices of new autos and used trucks.
Meanwhile, sales of existing U.S. homes rose to the highest level in eight months in June, indicating that the housing market is rebounding and may boost the economy this year. This was the third consecutive month of increase in home sales.
“The economy is normalizing from whatever went wrong in the first quarter. Growth is up and running,” Chris Rupkey, a New York-based chief financial economist at Bank of Tokyo-Mitsubishi UFJ spoke to Reuters.
U.S. home resales grew 2.6 percent to an annualized 5.04 million units in June as average house price touched the highest level since 2007. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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