U.S. consumer prices increased 0.6% in June, after three months of declines, with a big jump in gasoline prices accounting for over half of the gain.
The Labor Department reported Tuesday that the increase in its consumer price index followed declines of 0.4% in March, 0.8% in April and 0.1% in May as the hit to demand caused by the widespread shutdowns of the economy kept a lid on prices.
The June report showed that energy prices jumped 5.1% with gasoline costs surging 12.3%. However, even with that gain gasoline pump prices are 23.4% below where they were a year ago.
Core inflation, which excludes food and energy, rose a more modest 0.2% in June the first monthly increase since February.
Over the past 12 months, consumer prices have increased a modest 0.8% while core inflation is up just 1.2%.
That is well below the Federal Reserve’s 2% target for annual gains in inflation. Economists believe given the uncertain economic outlook with virus 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 backed purchases of Treasury bonds and mortgage-backed securities.
In addition to the 5.1% gain in energy costs, food prices were up 0.6% in June after a 0.7% May increase.