After a number of years of remarkably low inflation, at least according to official government statistics, inflation appears to be firming in America. In June, prices excluding food and energy were up two point three percent from a year earlier, matching the highest level since May of twenty twelve.
As indicated by writer Jeffrey Sparshott, while energy prices remain well below their levels of last summer, costs for housing, medical care, transportation, and clothing have all risen sharply. The costs of shelter account for about a third of the consumer price index, and they are up three point five percent over the past year, the strongest rise since September of two thousand and seven.
Core inflation reflects all prices except for food and energy. Both core and headline inflation have accelerated in recent months. Energy prices are meaningfully higher than they were in February. Wage pressures are also building, including in a number of cities and states that have recently boosted their respective minimum wages.
The emergence of inflationary pressures stands in stark contrast to the prior four years. Inflation in America has fallen short of the Federal Reserve Bank’s annual target of two percent for the past four years.
