WASHINGTON: US consumer prices jumped again in July, as spiking gasoline prices continue to fuel inflation, prompting the White House on Wednesday to call for oil producers to open the taps to boost supply.
However, overall inflation came in at a slower pace than the prior month as some impacts of the pandemic shutdowns appeared to dissipate, according to government data released Wednesday. The consumer price index rose 0.5 percent last month, seasonally adjusted, after a 0.9 percent surge in June, the Labor Department said.
Energy prices collapsed when the Covid-19 restrictions forced business and transport largely to shut down, but as widespread vaccinations allowed the economy to begin to return to normal gasoline prices have surged.
Gas prices jumped 2.4 percent compared to June and spiked 41.8 percent compared to July 2020, the report said.
Prices at the pump have become a political liability for President Joe Biden, and the White House on Wednesday called on the OPEC+ producers — the Organization of the Petroleum Exporting Countries and allies — to do more to boost supply to ease the prices spikes.
“Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery,” US National Security Advisor Jake Sullivan said in a statement.
But the recent OPEC+ agreement to increase output is “simply not enough” to fully offset cuts imposed during the pandemic, he said.
“President Biden has made clear that he wants Americans to have access to affordable and reliable energy, including at the pump.”
Sullivan also called on US regulators to take action against “any illegal conduct” or market manipulation that might be pushing gas prices higher for American drivers.
Sullivan’s statement comes three weeks after the OPEC+ group unveiled an agreement to boost output by 400,000 barrels per day (bpd) each month from August.
The deal means the group’s output will be restored to its pre-pandemic level by the end of 2022.
Private economists as well as policymakers at the Federal Reserve say price data have been skewed by the unprecedented effort to restart activity, but the impact should fade allowing inflation to return to an annual rate closer to two percent.
Total energy prices rose 1.6 percent in July, while food prices rose 0.7 percent, the report said. But when volatile food and energy goods are left out of the calculation, the core CPI rose just 0.3 percent, seasonally adjusted, just a third of the rate in June.
Over the latest 12 months CPI increased 5.4 percent, unadjusted, stabilizing after several months of sharp increases, while the core rate slowed to 4.3 percent.
“We believe June marked the peak in the in the annual rate of inflation,” said Kathy Bostjancic of Oxford Economics, noting that some of the pandemic impacts have “moderated greatly.”
However, she cautioned that annual inflation could remain above two percent for some time as “price increases stemming from the reopening of the economy and ongoing supply chain bottlenecks will keep the rate of inflation elevated and sticky as supply/demand imbalances are only gradually resolved.”
The reopening has led to other disruptions in the economy, including rental car companies rushing to restore their fleets to meet demand from traveling Americans, which drove used car prices to double digit increases in recent months. But they edged up just 0.2 percent compared to June.