Stable gas prices tame inflation in June

Food costs kept rising in June, but motorists finally got some relief at the gas pump, helping to keep inflation to the smallest increase in five months.

With the use of corn for ethanol pushing up food costs and gasoline prices rising again in July, though, economists said the moderation in inflation could prove temporary.

The Labor Department reported Wednesday that consumer prices edged up by 0.2 percent in June, far below the 0.7 percent surge of May, which marked the biggest jump in nearly two years. Total energy costs fell by 0.5 percent, balancing out a 0.5 percent rise in food costs, particularly for milk and other dairy products.

Prices have climbed by an annual rate of 5 percent in the first six months of this year, compared with a 2.5 percent rate in the second half of 2006. Two-thirds of the 2007 acceleration came from the jump in energy and food costs.

The rise in the energy and food sectors so far has not led to wider inflationary problems. Core inflation, which excludes the volatile energy and food costs, also rose by 0.2 percent in June. Core inflation is running at an annual rate of 2.3 percent in the first six months of this year, down from 2.6 percent in the second half of 2006.

The moderation in consumer inflation in June did provide a boost for workers' paychecks. Weekly earnings rose by 0.5 percent, the best showing in eight months.

source:news.cincypost.com