Inflation is soaring in the U.S.: Here’s why prices keep rising - NJ.com

The consumer price index, the U.S.’s key inflation measure, soared by 0.9 percent in June — the largest one-month increase in inflation measures in 13 years, according to the U.S. Department of Labor’s report released Tuesday.

The report from the Labor Department also noted that over the past year, prices went up 5.4%, the biggest jump in yearly inflation also in 13 years.

Much of the increase in prices is due to the rise in gasoline prices, which have increased way above summer 2020 levels.

The coronavirus pandemic caused a sharp drop in the number of cars on the road last year, leading to lower oil prices. But now that the nation is slowly recovering from the pandemic and getting vaccinated, demand for travel is back, and so is demand for oil and gas.

Gas prices went up 45.1% compared to last year, the Labor Department said.

Food prices also have increased over the past year by 2.4%, and prices for eating out at restaurants rose 4.2%, according to the Labor Department.

As restaurants are reopening, they are having trouble attracting help, which has led to sign-on bonuses and higher wages for employees.

But the increased cost for the employees comes at a price to the customer, leading to higher prices for menu items.

Food and fuel prices were not the only things that led to higher costs. Core CPI increased by 0.9% in June and 4.5% in the last year.

Inflation is soaring partially because prices are returning to normal levels after the economy fell into a pandemic-induced recession.

Economists at the Federal Reserve and the White House expect this round of inflation to pass, although some central bank officials have conceded that inflation is stronger than they had thought.

“What this really shows is inflation pressures remain more acute than appreciated and are going to be with us for a longer period,” Sarah House, senior economist for Wells Fargo’s corporate and investment bank, told CNBC. “We are seeing areas where there’s going to be ongoing inflation pressure even after we get past some of those acute price hikes in a handful of sectors.”

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Katherine Rodriguez can be reached at krodriguez@njadvancemedia.com. Have a tip? Tell us at nj.com/tips.

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Inflation is soaring in the U.S.: Here’s why prices keep rising - NJ.com
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