The cost of living in the U.S. rose in June, propelled by a rebound in fuel prices and sustained gains in rents that are driving inflation closer to the Federal Reserve’s goal.
The consumer price index climbed 0.2% for a second month, Labor Department figures showed July 15 in Washington. A second consecutive decrease in food costs held it below the median forecast of 82 economists surveyed by Bloomberg News, which called for a 0.3% advance.
Steadying energy costs and the dissipating influence of the strong dollar will stoke price pressures more broadly and enable companies to regain the ability to charge their customers more. Faster inflation underpinned by an improving economy and a healthy job market would also enable the Fed to resume raising interest rates.
“We’re starting to see upward pressure on the inflation numbers,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics, said before the report. “It reinforces the case for the Fed to resume tightening, though they’re highly risk averse right now.”
A report from the Commerce Department showed retail sales June rose 0.6%, more than projected and showing consumers propelled a rebound in growth during the second quarter.
Bloomberg survey estimates for the consumer price index ranged from a gain of 0.1% to 0.4%.
Prices increased 1% in the 12 months ended in June, the same as in the prior month.
The core CPI measure, which excludes volatile food and fuel costs, also rose 0.2% for a third month. It increased 2.3% from June 2015, up from 2.2% in the prior 12-month period and matching the largest year-to-year advance of the economic expansion that began in 2009.
Energy costs increased 1.3% from a month earlier, the report showed. Food prices dropped 0.1%.
Expenses for shelter climbed 0.3%, driven up by rents and hotel rates. Increases in medical care, education and airline fares also contributed to the advance in core prices.
The cost for services excluding rents climbed just 0.1% in June, the smallest gain since January.
Higher prices for shelter, including rents and hotel rates, have been helping to prop up inflation, while cheaper energy bills and the stronger dollar were exerting downward pressure last year.
The Fed’s preferred gauge of inflation, which is the Commerce Department’s personal consumption expenditures measure, hasn’t matched the central bank’s 2% goal since April 2012.
The CPI is the broadest of three price gauges from the Labor Department because it includes all goods and services. About 60% of the index covers prices consumers pay for services from medical visits to airline fares, movie tickets and rents.
The cost of living dented paychecks in June, a separate report from the Labor Department showed July 15. Hourly earnings adjusted for inflation fell 0.2% from the prior month. They rose 1.5% over the past 12 months.