WASHINGTON: U.S. consumer prices rebounded by the most in nearly eight years in June, but a resurgence in new COVID-19 cases after the reopening of businesses suggests a moderation in demand that could keep inflation muted and allow the Federal Reserve to keep injecting money into the ailing economy.
The consumer price index increased 0.6per cent last month, the biggest gain since August 2012, after easing 0.1per cent in May. The increase, which ended three straight months of declines, was driven by a 12.3per cent jump in gasoline prices after dropping in the first five months of the year. The Fed is pumping money into the economy through extraordinary measures, including large-scale asset purchases and funneling loans to firms. Separately, the government has provided nearly US$3 trillion in fiscal stimulus, contributing to a record monthly budget deficit in June.
Stocks on Wall Street were mixed. The dollar fell against a basket of currencies. U.S. Treasury prices rose.Excluding the volatile food and energy components, the CPI rose 0.2per cent in June after slipping 0.1per cent in May. The so-called core CPI had dropped for three consecutive months for the first time since the series started in 1957.
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