US consumer prices rose 0.2% in June despite a drop in energy costs, the Labor Department reported today, raising fresh concerns about inflation trends.
The core rate, which excludes the volatile food and energy components, rose 0.3% in the month. The report showed energy prices fell 0.9% in the month, the first decline since February. Energy prices jumped 2.4% in May and 3.9% in April.
The headline consumer price index (CPI) figure was in line with expectations, while the core rate - watched more closely by economists as an indicator of future trends - was slightly above the 0.2% increase expected on Wall Street.
The report marked the fourth 0.3% monthly gain in the core index in a row and translated into an increase of 2.6% over the past 12 months.
The news could put more pressure on the Federal Reserve to keep lifting interest rates even after 17 consecutive quarter-point increases in the federal funds rate, currently at 5.25%. Economists say the Fed is concerned about keeping the core rate of inflation in check.
Separate figures from the Commerce Department showed that US housing starts fell 5.3% in June to an annual pace of 1.85 million units, in a further sign of a cooling in the US property market.
The report was weaker than the average forecast of private economists. Building permits, an indicator of future trends, fell 4.3%. in the month. Housing starts are down 11% from the same period a year ago and permits are off 14.9%.
