US inflation over the last 12 months is the lowest since October as consumer prices slid for a third straight month, according to a government report released Friday.
The Consumer Price Index, the most closely watched indicator of inflation, retreated 0.1 percent in June after a 0.2 percent dip in May, the Labor Department said. The monthly decline was led by plummeting energy costs, and assisted by flat food prices.
"Similar to April and May, a decline in the energy index caused the … decrease in June," the Labor Department stated. "The index for energy decreased 2.9 percent in June, the same decline as in May, with a decline in the gasoline index accounting for most of the decrease. This more than offset an increase in the index for all items less food and energy, while the food index was unchanged for the second month in a row."
Over the past year, US inflation rose 1.1 percent following an increase of 2.0 percent in the 12 months ending in May.
Excluding volatile food and energy costs, so-called core consumer prices rose 0.2 percent in June, marking the biggest gain since October 2009. Core consumer prices were up 0.9% on an annual basis, maintaining the smallest 12-month increase since the 1960s.
Gold is often purchased as a hedge against inflation. June’s tame inflation reading and plummeting consumer sentiment did not assist the yellow metal, which plunged nearly $20 toward $1,190 an ounce as safety buying went out the window along with other assets and U.S. stocks.
"Gold futures fell Friday, tracking other assets after a drop in consumer sentiment battered stocks while a report showing benign inflation for June offset gold buying on inflation fears," noted Claudia Assis and Sue Chang of MarketWatch.
Consumer prices in June
Several price figures for the month follow:
- Used car and truck prices climbed 0.9% in June after rising 0.6% in May. They are up 16.1% over the past
- Clothing prices jumped 0.8% last month following a more modest increase of 0.2% in May. Prices are still down 0.4% from a year ago, however.
- Shelter costs, which account for about one-third of the CPI, matched May’s 0.1% increase. They were unchanged in April and have declined 0.7% over the past year.
- The energy index fell 2.9% for the second month in a row, after declining 1.4% in April. They have climbed 3.0% over the past 12 months, however.
- Airline fares declined 0.6% in June after rising 1.9% in May and 2.2% in April.
- Gasoline prices dropped 4.5% following a plunge of 5.2% in the prior month. They are 3.0% higher than a year ago.
U.S. Inflation Calculator Update
Using the Labor Department’s most recent Consumer Price Index data, the CoinNews US Inflation Calculator shows how consumer prices have changed over the years. By entering any two dates from 1913-2010 and a dollar amount, the calculator measures the buying power of the dollar over time. Inflation over the years can be seen with these few calculator examples:
- An item purchased in 1913 for $1 would now cost $22.02
- An item purchased in 1950 for $10 would now cost $90.44
- An item purchased for $20 in 1985 would now cost $40.51
Mixed dates may also be used with the Inflation Calculator. As examples:
- An item purchased today for $500 would have cost $123.41 in 1975
- An item purchased for $1000 in 1980 would have cost $1,586.17 in 1990
Of course, not all "goods and services" rise or fall in tandem with inflation rates. For example, many computers when adjusted for inflation are actually less expensive today (and do more) compared to years ago.