US consumer prices rose at twice the rate expected in July to post the fastest rate of year-over-year growth in more than 17 years, pushed up by costlier energy and food, a government report showed today.
The Consumer Price Index, considered a key gauge of inflation, rose 0.8 per cent in July after a 1.1 per cent jump in June. That was far above the 0.4 pe rcent gain that economists had forecast for July.
Prices were up 5.6 per cent from a year ago, the sharpest year-over-year rise since 5.7 per cent in January 1991. That was also well above the 5.1 per cent increase that economists had forecast.
Energy prices rose 4 per cent in July after a 6.6 per cent June gain and were up 29.3 per cent on a year-over-year basis. Food costs rose 0.9 per cent following a 0.8 per cent June increase and put food costs 6 per cent higher than a year ago.
Excluding volatile food and energy items, the so-called core CPI rose 0.3 per cent in each of June and July, slightly above forecasts for a 0.2 per cent gain in July. On a year-over-year basis, core prices rose 2.5 per cent in July, slightly more than the 2.4 per cent rise that was forecast.
Meanwhile, the number of US workers filing new claims for jobless benefits fell by 10,000 last week but remained at levels that show labour markets under severe strain.
Initial claims for state unemployment insurance benefits dipped to a seasonally adjusted 450,000 in the week ended August 9th from an upwardly revised 460,000 in the prior week, according to government data. That was still well above the 432,000 claims level that economists had forecast.
The last time that weekly claims fell was at the start of July.
But a four-week moving average of new jobless claims, regarded as a better gauge of underlying labour trends because it irons out week-to-week volatility, climbed to 440,500 last week from 421,000 the week before. That was the highest reading in more than six years, since it hit 445,500 in April 2002.
In addition, the number of people remaining in the benefits roll after drawing an initial week of aid shot up by 114,000 to 3.42 million in the week ended August 2nd, the most recent week for which the data is available. That was the highest level for continued claims since November 2003.
Reuters
Most economists consider a reading above 400,000 for weekly claims as indicating recession-like conditions. New-claim filings have topped 400,000 for each of the past four weeks.