WASHINGTON: U.S. underlying consumer prices increased by the most in nearly 1-1/2 years in June amid solid gains in the costs of a range of goods and services, but that will likely not change expectations the Federal Reserve will cut interest rates this month.
The so-called core CPI was boosted by strong gains in prices for apparel, used cars and trucks, as well as household furnishings. There were also increases in the cost of healthcare and rents. In the 12 months through June, the core CPI climbed 2.1per cent after advancing 2.0per cent in May. The Fed last month downgraded its inflation projection for 2019 to 1.5per cent from the 1.8per cent projected in March. Powell on Wednesday said"there is a risk that weak inflation will be even more persistent than we currently anticipate."In another report on Thursday, the Labor Department said initial claims for state unemployment benefits declined 13,000 to a seasonally adjusted 209,000 for the week ended July 6, the lowest level since April.
Despite the rising risks to the 10-year old economic expansion, the longest in history, the labor market remains healthy. The economy created 224,000 job in June. The tightening labor market has, however, not generated robust wage gains. This has helped to keep inflation moderate.