Inflation climbs higher than expected in June as price index rises 5.4%

Jeff Cox of CNBC.

"Key Points

• Consumer prices increased 5.4% in June from a year earlier, the biggest monthly gain since August 2008.
• Excluding food and energy, inflation increased 4.5%, the largest move since September 1991.
• Used car and truck prices comprised about one-third of the total CPI increase."

 

One thing to keep in mind when comparing prices now to prices a year ago is that last year the Consumer Price Index (CPI) was lower in April, May and June than it was in both February and March (you can find these numbers at (Consumer Price Index Data from 1913 to Present) which is in the list of links on the right.

Even when prices did start to come up, the overall rise in the CPI from Dec. 2019 to Dec. 2020 was just 1.4% (and if we use the overall average for each year it was up just 1.2%). This was partly due to the lower demand during pandemic as people stayed home and did not spend as much as would normally be expected.

From May to June this year, the CPI was up 0.929%. If it does that for a whole year, we will have an 11.7% inflation rate.

Some economists say we should compare the CPI now to 2019. So the table below shows the CPI for all months from Jan.-June for 2019-2021.

	2019	2020	2021
Jan	251.712	257.971	261.582
Feb	252.776	258.678	263.014
Mar	254.202	258.115	264.877
Apr	255.548	256.389	267.054
May	256.092	256.394	269.195
June	256.143	257.797	271.696

Now the percentage increase in the CPI from 2019-2021 and 2020-2021

	2019-21	2020-21
Jan	3.92%	1.40%
Feb	4.05%	1.68%
Mar	4.20%	2.62%
Apr	4.50%	4.16%
May	5.12%	4.99%
June	6.07%	5.39%

So prices are 6.07% higher in June 2021 than in June 2019 (so around 3% per year). But most of that must be in the last year since from last June it is 5.39% (it was less than 1% from June 2019 to June 2020).

Whichever time period we look at, the rates are getting higher month by month. The CPI is up 4.3% from Dec. 2020-June 2021.