In this June 14, 2018, file photo gasoline prices are displayed on a pump at Sheetz along the Interstate 85 and 40 corridor near Burlington, N.C. On Thursday, July 12, the Labor Department reports on U.S. consumer prices for June. (AP Photo/Gerry Broome, File)

US inflation reaches 2.9 per cent in June, highest in 6 years

WASHINGTON — Consumer prices rose in June from a year earlier at the fastest pace in more than six years, lifted by more expensive gas, car insurance, and higher rent.

The Labor Department said Thursday that the consumer price index ticked up just 0.1 per cent in June. But inflation jumped 2.9 per cent from a year earlier, the largest annual gain since February 2012. Core prices, which exclude the volatile food and energy categories, rose 0.2 per cent in June and 2.3 per cent from a year earlier.

Solid economic growth and supply bottlenecks have pushed inflation past the Federal Reserve’s 2 per cent target, after price gains had languished below that level for six years. That is a key reason that Fed officials expect to raise short-term rates twice more this year.

Price gains may intensify if President Donald Trump makes good on his threat Tuesday to slap tariffs on $200 billion of Chinese goods, including furniture, hats, and handbags. If implemented, those duties, combined with tariffs put in place last week, would mean about half of China’s imports would be subject to extra duties, likely boosting costs for consumers.

Andrew Hunter, an economist at Capital Economics, said overall inflation may decline in the coming months as the recent gas price spikes level off. Prices at the pump averaged $2.88 a gallon nationwide Thursday, down 3 cents from mid-June.

“Nonetheless, with the labour market exceptionally tight and activity expanding strongly, we think that core inflation has further to rise,” Hunter said in a research note. “The prospect of further tariffs on Chinese imports will only add to that upward pressure.”

Household appliance prices rose in June from a year earlier at the fastest pace in five years, Hunter noted, lifted by a 13 per cent increase in washing machine costs. Trump imposed tariffs on washing machines in January.

The Fed’s preferred inflation gauge has increased at a slower pace, up 2.3 per cent in the past year. But most economists expect the Fed will raise rates a total of four times this year as it attempts to keep inflation in check without cutting off growth.

With consumers and businesses spending more, trucking firms have struggled to hire enough workers to keep goods moving. That has boosted shipping prices, lifting costs for businesses that may soon be passed on to consumers.

In June, gas prices increased 0.5 per cent and have soared 24.3 per cent in the past 12 months. That has sent prices at the pump toward nearly $3 a gallon, sucking more money from consumers’ wallets and offsetting roughly a third of the benefit from last year’s tax cuts.

Fuel oil has surged nearly 31 per cent in the past year, pressuring airlines. Delta cut its full-year profit outlook Thursday, citing a $2 billion surge in fuel prices. Airlines have tried to offset rising fuel costs in a number of ways, including additional charges for passengers like bag fees.

Rents rose 0.3 per cent in June and overall housing costs have increased 3.4 per cent in the past year. Auto insurance prices also increased 0.3 per cent last month and have jumped 7.6 per cent from a year earlier.

New and used cars and medical care have also become more expensive. Clothes and household furniture fell in price last month.

Christopher Rugaber, The Associated Press

Just Posted

Severe thunderstorm watch for Central Alberta

Thunderstorm watch covers large area including Sylvan Lake to Stettler

Bird on a wire causes electrical problems in Red Deer

City workers put protective covers on line

WATCH: Kayakers go over Ram Falls south of Nordegg

Two take 30-metre plunge, post video of thrill ride

Count shows slight decrease in Red Deer’s homeless

In two years, the number of homeless in Red Deer has decreased… Continue reading

Nightly closures on Taylor Drive next week

Taylor Drive to be closed Monday to Friday night for bridge demolition work

WATCH: Cirque ZUMA ZUMA puts on a show at Westerner Days

ZUMA ZUMA performs three times a day during Westerner Days

Divers hunt for 4 after Missouri duck boat sinks, killing 13

BRANSON, Mo. — Divers are searching Friday for four people still missing… Continue reading

WATCH: Red Deer’s noxious weeds are a goat’s dietary delight

Piper Creek Community Garden gets chemical-free weed control

‘Amazing Race Canada’ competitors face B.C. challenge

They drove Corvettes, mastered falconry basics, and ate blueberry pie in the Cowichan Valley

From hot to not? The Baloney Meter weighs in on Scheer’s economy claims

OTTAWA — “Justin Trudeau inherited a booming economy, but he’s squandering it.… Continue reading

Scathing suicide inquiry finds gaps, shortcomings at Royal Military College

OTTAWA — Members of a board of inquiry into three suicides at… Continue reading

Premiers strike deal to allow increased flow of beer, alcohol across borders

ST. ANDREWS, N.B. — Canada’s premiers are set to wrap up their… Continue reading

Trump ready to hit all Chinese imports with tariffs

President Donald Trump has indicated that he’s willing to hit every product… Continue reading

Canada’s annual inflation rises 2.5% thanks to boost from higher energy prices

OTTAWA — The country’s annual inflation rate rose 2.5 per cent in… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month