Cost of living increasing at fastest rate in 10 years
Consumer prices climbed 2.9 percent in July from a year earlier, a rate of inflation that suggests Americans are earning less than a year ago despite an otherwise solid economy.
The Labor Department said Friday that the consumer price index ticked up 0.2 percent in July. Annual inflation matched the 2.9 percent pace from June, which had been the highest level since February 2012. Core prices, which exclude the volatile food and energy categories, rose 0.2 percent in June and 2.4 percent from a year earlier.
Most of July’s increase in consumer prices came from higher housing costs. Prices for energy, medical care and apparel slipped in July, while food expenses rose slightly. Used-car prices have also been rising faster.
The higher figures make it almost certain the Federal Reserve will hike interest rates two more times this year and beyond, analysts said.
“With economic growth strong and inflation overshooting, we expect the Fed to continue hiking interest rates once a quarter over the coming 12 months,” wrote Michael Pearce, senior U.S. economist for Capital Economics, in a note.
Adjusted for inflation, average weekly earnings have fallen 0.1 percent in the past 12 months.
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