Consumer prices follow rising electricity prices
July 17, 2001
WASHINGTON (AP) Consumer prices edged up last month as electricity prices continued to surge while the cost of gasoline and other energy products retreated.
The Labor Department reported Wednesday that the Consumer Price Index, the government’s most closely watched inflation measure, climbed by a seasonally adjusted 0.2 percent in June. The index was up 3.8 percent for the year.
The new reading on consumer prices matched analysts’ expectations.
The ”core” rate of inflation, which excludes volatile energy and food prices, rose 0.3 percent in June compared with just 0.1 percent in May.
”It’s a bit worrisome,” said Joel Naroff of Naroff Economic Advisors. Inflation isn’t out of control, but price pressures don’t seem to be easing, he said.
U.S. economic growth has slowed dramatically since last summer. Many analysts say growth in the just-completed April-June quarter will come in at a weak annual rate of 0.5 percent, compared with the 1.2 percent growth recorded in the first three months of the year.
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Economists predict consumers will keep the economy out of recession with their spending expected to increase in coming months, reflecting the boost provided by lower interest rates and the big tax cut passed by Congress.
One part of the economy that has held up well is housing. A separate report by the Commerce Department indicates that sector remains strong.
Housing construction rose 3 percent in June to a seasonally adjusted annual rate of 1.66 million. That followed a revised 1 percent decline in May.
Consumer energy prices overall dropped 0.9 percent last month, though they were still up 11.8 percent for the year.
The cost of electricity jumped 3.8 percent last month the largest increase on record. Natural gas prices were 5.6 percent less, the largest decline on record. The cost of gasoline dropped 2.6 percent, the best showing since March, when prices dropped 3.8 percent.
Economists had been predicting that energy prices would retreat following a sharp run-up last winter that was caused by a shortage of supplies.