Prices jumped 5.4 percent in June, the biggest rise since 2008.
A key measure of inflation jumped sharply in June, a gain that is sure to keep concerns over rising prices front and center at the White House and Federal Reserve.
The Consumer Price Index climbed by 5.4 percent in the year through June, the Labor Department said, as prices for used cars and trucks accelerated rapidly and accounted for more than a third of the surge. The overall inflation change was more than the 5 percent increase reported in May and was the largest year-over-year gain since 2008.
Investors, lawmakers and central bank officials are closely watching inflation, which has been elevated in recent months by both a quirk in the data and by mismatches between demand and supply as the economy rebounds. Quick price gains can squeeze consumers if wages do not keep up, and the pickup could prod the central bank to pull back on support for the economy if it looks as if the inflation is going to prove sustained. The Fed’s cheap-money policies are generally good for markets, so a rapid withdrawal would be bad news for investors in stocks and other asset classes.
Policymakers expect inflation will fade as the economy gets through a volatile pandemic reopening period, but how quickly that will happen is unclear. Prices have climbed faster than officials at the Fed had predicted earlier this year, certain measures of consumer inflation expectations have risen — something that could make inflation a self-fulfilling prophecy if it becomes more extreme — and some officials at the central bank are increasingly wary. At the same time, markets have become more sanguine about the outlook for inflation.
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