The latest inflation numbers are out. According to the Bureau of Labor Statistics, the consumer price index rose 0.3 percent in June, following a 0.4 percent rise in May, mostly thanks to high gasoline prices. However, core CPI — which ignores volatile food and gas prices — was only 0.1 percent. CPI year-over-year, which is the number commonly referred to when talking about inflation, now sits at 2.1 percent (1.9 percent without food and gas).
Inflation is creeping up as the economy’s recovery becomes more durable, a welcome development for some Federal Reserve officials who had worried that price pressures were too low.
The steady increases have led some economists to predict that a separate inflation gauge watched by the Fed, currently running below the U.S. central bank’s 2 percent target, could breach that target by year-end as an acceleration in job growth lifts wages.
Fed Chair Janet [Yellen] warned last week the Fed could raise interest rates sooner and more rapidly than currently envisioned if the labor market continued to improve faster than anticipated by policymakers.