USA consumer prices accelerate in July; inflation remains under control By

USA consumer prices accelerate in July; inflation remains under control By

USA consumer prices jumped 0.6% in July as gasoline prices continued to rise.

The consumer price index rose 0.6% from the prior month, following a 0.6% gain in June, Labor Department figures showed Wednesday. The pick-up in July headline CPI is unlikely to be sustained in coming months due to still weak demand conditions and the high base of comparison in 2019 while high pork prices and weather-induced increase in food prices are expected to ease.

Gasoline prices rose 5.3% from June to July but are down 20.3% in the past 12 months as the coronavirus recession kept many Americans from driving.

The overall food index component of the CPI fell 0.4% in July, its first decline since April. But inflation remains in check: Consumer prices are up just 1% over the past year.

US consumer prices increased more than expected in July, but high unemployment is likely to keep inflation under control, allowing the Federal Reserve to continue pumping money into the economy to aid the recovery from the COVID-19 recession.

At 1.6%, the spread between food away from home inflation and at home inflation is at its highest level since the early 1970s and hasn't been close to these levels since 1991. July's core PCE price index data will be released later this month. At least 31.3 million people are on unemployment benefits. That followed June's 0.1% gain, which was the smallest rise since July 2013. The dollar slipped against a basket of currencies. U.S. Treasury prices were trading mostly lower. Wholesale gasoline prices increased 10.1% after advancing 26.3% in June.

The increases are seen as a rebound in demand despite the recent surge in coronavirus cases that has forced some states to backtrack on reopening plans. The index for full-service meals rose 0.4%, down from a 0.9% rise in June, while the index for limited service meals rose 0.6%, compared with a previous rise of 0.5%. The cost of apparel and used vehicles also climbed sharply. The cost of prescription medication, however, fell 0.2%.

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