What You Need to Know
- The jump in consumer prices this past month was the highest one-month rise since June 2008.
- Used cars and energy were two large components that goosed prices.
- The Fed believes the increase is transitory.
A surge in inflation in June pushed an advocacy group’s projection for the 2022 cost-of-living adjustment for Social Security to 6.1%. If that figure, adjusted monthly based on the Consumer Price Index, holds until the COLA is announced in October, it would be the biggest COLA since 1983.
The estimate is based on the 0.9% increase in the core CPI announced Tuesday by the Bureau of Labor Statistics. The CPI for all urban consumers in June rose 5.4% over the past 12 months. But what was behind the surge?
Used cars, food and gasoline, says the BLS.
“The index for used cars and trucks continued to rise sharply, increasing 10.5% in June. This increase accounted for more than one-third of the seasonally adjusted all items increase,” the BLS stated. “The food index increased 0.8% in June, a larger increase than the 0.4% increase reported for May. The energy index increased 1.5% in June, with the gasoline index rising 2.5 % over the month.”
The core index, which excludes food and energy prices, rose 0.9% in June after rising 0.7% in May.
Also part of the rise in prices were airline fares and apparel. Interestingly, “the index for medical care and the index for household furnishings and operations were among the few major component indexes which decreased in June,” the BLS states.