US consumer prices rose by a slightly bigger-than-expected 0.2 per cent in June on higher food costs and they were up by the same amount after stripping out volatile food and energy prices, the Labor Department reported today.
Last month's gain in the Consumer Price Index was slightly larger than the 0.1 per cent advance Wall Street economists were expecting to see after a fall-off in energy prices.
But the increase in the more closely watched core prices index was directly in line with expectations. Food prices advanced 0.5 per cent in June, continuing a string of increases. They contributed 17 per cent to the overall CPI increase in the first half of this year.
Energy prices were down 0.5 per cent last month, but the Labor Department said for the first half of this year, they advanced at a 27.8 per cent seasonally adjusted annual rate and accounted for about 48 per cent of the advance in the overall CPI.
Ex-food, ex-energy prices were up 2.2 per cent from the same time a year ago, this was in line with expectations. The overall CPI was up 2.7 per cent from a year ago, slightly more than the 2.6 per cent advance economists were expecting.
Meanwhile the pace of US home construction rose 2.3 per cent in June but building permit activity, a sign of future construction plans, sank to its lowest rate in 10 years according to government data today, signaling further weakness in the listless housing market.
The Commerce Department said housing starts set an annual rate of 1.467 million units in June compared with a revised 1.434 million unit pace in May. Economists had forecast June housing starts to drop to a 1.45 million unit pace from the 1.474 million unit rate originally reported for May last month.