By Eric Morath
WASHINGTON--Americans paid more for rent, groceries and gasoline
in June, pushing a broad measure of annual consumer inflation into
positive territory for the first time in 2015.
The consumer-price index, which reflects what Americans pay for
everything from clothes to computers, rose a seasonally adjusted
0.3% in June from a month earlier, the Labor Department said
Friday.
Prices rose 0.1% compared with a year earlier. Consumer costs
were unchanged in May and had fallen 0.2% in April, when compared
to a year earlier. The last annual increase came in December.
"Inflation is perking up," said Gregory Daco, economist at
Oxford Economics. Price increases should continue in the coming
months due to "stronger domestic activity and reduced pass-through
from the stronger dollar."
When excluding volatile energy and food categories, core prices
were up 0.2% last month and 1.8% from a year earlier.
Food prices, up 0.3% in June, were particularly hard to swallow
for breakfast lovers. The widespread outbreak of avian influenza
caused egg prices to jump 18.3% last month, the biggest increase
since August 1973. And bacon prices rose 1.5% last month, the
largest increase in a year.
Prices for shelter, which account for a third of the overall
index, rose 0.3% last month and are up 3% from a year earlier.
There is a limited supply of rental properties in comparison to
strong job growth and an increased number of Americans establishing
households, said Mike Schall, chief executive of West Coast
apartment owner Essex Property Trust Inc. "That's a very favorable
relationship for us and has allowed us to grow rents pretty
aggressively," he told investors last month.
A steep fall in energy prices had driven down the inflation
reading since the middle of last year, but that effect is beginning
to abate. Gasoline prices were up 3.4% on a seasonally adjusted
basis in June. Still, they remain 23.3% below year-earlier
levels.
Thursday's report did show declining prices for many goods that
often are imported. From a year earlier, apparel prices are down
1.8%, home-furnishing costs declined 1.3% and toy prices plunged
6.2%. A stronger dollar has made the price of foreign goods
relatively more affordable.
Inflation readings returning back to positive territory could
reassure Federal Reserve policy makers, as they contemplate raising
short-term interest rates, which have been near zero since December
2008. Central bank officials have indicated they could start
lifting rates as early as September.
Low inflation reflects "influences that are likely to be
transitory, particularly the earlier steep declines in oil prices
and in the prices of non-energy imported goods," Fed Chairwoman
Janet Yellen told members of Congress this week.
If the economy advances as central bankers anticipate "that will
warrant gradual increases in the federal-funds rate as the
headwinds that still restrain real activity continue to diminish
and inflation rises."
The Fed's preferred inflation gauge, the price index for
personal consumption expenditures, has undershot a 2% target for
three years. The measure increased 0.2% in May from a year earlier.
Historically, the CPI measure has run ahead of the PCE index, but
the two indicators have swapped positions so far this year. The
firmer CPI reading could suggest a corresponding bump to the Fed's
preferred gauge.
"Inflation momentum will be welcomed news at the Fed," said TD
Securities economist Millan Mulraine. "This report adds to the case
for a September hike."
Write to Eric Morath at eric.morath@wsj.com
Access Investor Kit for Essex Property Trust, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US2971781057