Consumer Price Index Rebounds After Months Of Declines

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6% in June on a seasonally adjusted basis, rebounding after a 0.1% decrease in May, the Bureau of Labor and Statistics said in a Tuesday report. 

What Happened: After months of a falling CPI, June saw the largest increase over the past year.

Gasoline grew a massive 12.3% and the energy index increased by 5.3%.

For consumers, the food index for food at home also increased .6%. 

The CPI measures the change in prices paid by consumers for goods and services. The CPI reflects spending patterns for each of two population groups: all urban consumers and urban wage earners and clerical workers.

Why It’s Important: For producers, prices going up is good for business and can mean that demand is increasing for certain goods — but also can mean that some goods are harder to come by.

In the last year, beef has seen an index price increase of over 25.1%.

Index increases in other areas signal a return of some services and spending on certain goods, which shows at least some increase in economic activity.

The index for all items less food and energy increased 0.2% in June, with services such as auto insurance and physician services also seeing increases after months of decreases.

Other notable changes include airfare increasing 2.6% and the used cars index decreasing another 1.2%, making three straight months of decreases.

What’s Next: With some states experiencing a second wave of shutdowns in July and other states entering a first shutdown, don’t expect these increases to continue. Economists will look for necessities to increase in price partially as a result of supply chain issues in industries like food.