According to Labor Department data released Tuesday, the consumer price index jumped 0.9% in June and 5.4% from the same month last year.
Excluding the volatile food and energy components, the so-called core CPI rose 4.5% from June 2020, the most significant advance since November 1991.
Economists expected the Labor Department to report a 0.5 rise in consumer prices in June compared with May, down only slightly from the 0.6 percent in the previous month’s initial report. The consensus forecast was for a 5.0 percent gain when measured against June of 2020, which would have tied with May, the most extreme reading since raising energy prices pushed the index up in the fall of 2008.
For three months in a row, inflation has exceeded expectations. However, the June figure is the highest since June 2008, which saw prices jump 1 percent in a single month.
The soaring used cars and trucks prices dominate the index, increasing 10.5 percent in June. This increase accounted for more than one-third of the seasonally adjusted all items increase. The food index increased 0.8 percent in June, accelerating from the 0.4 percent reported in May. In June, the energy index increased 1.5 percent, and the gasoline index rose 2.6 percent.
Treasury Secretary Janet Yellen and Federal Reserve officials expect the skyrocketing increase in living costs to taper off later this year.
Some analysts fear that inflation will be prolonged and become hotter than expected because of low interest rates combined with pent-up consumer demand for goods and services, a colossal budget deficit, and the release of savings built from stimulus payments. A survey of economists released Monday showed that many expect the period of high price gains to last longer than anticipated a few months ago. A study of consumers by the New York Fed found that the public expects prices to rise 4.8 percent over the next 12-months, the fastest anticipated inflation on record in data going back eight years. A plurality of Americans now says price levels are the most important economic indicator, a change from earlier in the year when unemployment and jobs figures were considered the most important.