Consumer Prices Unchanged In June
Falling gas prices and rising food costs offset each other
Friday, July 20, 2012
In June gasoline prices were down, food prices were up and everything else was mostly unchanged. As a result, the U.S. Labor Department reports the Consumer Price Index (CPI), a measure of what consumers pay for goods and services, was flat last month.
The “core” CPI, which excludes food and energy, was up a modest 0.2 percent. Over the last 12 months, consumer prices have risen 1.7 percent on a seasonally adjusted basis.
Energy prices at the consumer level declined 1.4 percent in June. This followed declines of 1.7 percent in April and 4.3 percent in May. While that was a welcome break for consumers, some of the money they saved at the gas pump was spent at the supermarket.
Rising food costs
The government's food index rose 0.2 percent in June after being unchanged in May.
The index for food consumed at home turned up in June, rising 0.1 percent after declining 0.1 percent the prior month. Fresh produce was more expensive, as were meat, fish, eggs and poultry.
Dairy products costs less, as did cereal and baked good.
Restaurant meals cost more in June, going up 0.2 percent. Over the last 12 months the cost of dining out has risen 2.9 percent.
The cost of a new car went up 0.2 percent last month but prices of used cars and trucks remained flat.
Apparel costs continued to go up. Prices for clothing rose 0.5 percent after 0.4 percent gains in April and May. For the last 12 months, apparel costs are up 3.9 percent, not far behind medical care costs -- up 4.3 percent in the same period.
Looking to the future, consumers can probably expect gasoline prices to begin creeping back up again. World oil prices, which declined over the spring because of concerns about a slowing economy, are beginning to rise once again.
Food prices, meanwhile, might rise even more. The summer drought in much of the nation has already dramatically impacted food prices at the producer level. It's only a matter of time before they make their way to the consumer level.
Corn futures have increased nearly 50 percent since the drought began. That will have a huge impact since corn not only goes directly into many manufactured food products but is also a key ingredient in feed for cattle, hogs and chicken. Those prices can be expected to rise in the coming weeks because of the extended drought.