CONSUMER prices up as gas costs moderate
Wednesday, July 18th 2001, 12:00 am
By: News On 6
WASHINGTON (AP) _ Consumer prices edged up last month as electricity prices continued to surge while the cost of gasoline and other energy products retreated.
The Labor Department reported Wednesday that the Consumer Price Index, the government's most closely watched inflation measure, climbed by a seasonally adjusted 0.2 percent in June. The index was up 3.8 percent for the year.
The new reading on consumer prices matched analysts' expectations.
The ``core'' rate of inflation, which excludes volatile energy and food prices, rose 0.3 percent in June compared with just 0.1 percent in May.
U.S. economic growth has slowed dramatically since last summer. Many analysts say growth in the just-completed April-June quarter will come in at a weak annual rate of 0.5 percent, compared with the 1.2 percent growth recorded in the first three months of the year.
But economists predict consumers will keep the economy out of recession with their spending expected to increase in coming months, reflecting the boost provided by lower interest rates and the big tax cut passed by Congress.
One part of the economy that has held up well is housing. A separate report by the Commerce Department indicates that sector remains strong.
Housing construction rose 3 percent in June to a seasonally adjusted annual rate of 1.66 million. That followed a revised 1 percent decline in May.
Consumer energy prices overall dropped 0.9 percent last month, though they were still up 11.8 percent for the year.
The cost of electricity jumped 3.8 percent last month _ the largest increase on record. But natural gas prices were 5.6 percent less, the largest decline on record. The cost of gasoline dropped 2.6 percent, the best showing since March, when prices dropped 3.8 percent.
Economists had been predicting that energy prices would retreat following a sharp run-up last winter that was caused by a shortage of supplies. Still, California residents face difficult problems and potential power shortages because of insufficient electrical generating capacity.
Motorists this summer have been getting a break at the gas pump after world crude oil prices eased and refiners rushed to fill shortages that developed during the spring.
Gasoline prices dropped nearly 13 cents in the past three weeks as supplies rose. The average price of gasoline, including all grades and taxes, was $1.51 Friday _ down 12.8 cents since June 22, according to the Lundberg Survey of about 8,000 gas stations nationwide.
Airline fares surged 5 percent last month, the biggest increase since October 1999, when prices jumped 5.3 percent.
Food prices, meanwhile, were up 0.4 percent in June and up 3.7 percent for the year. Clothing prices fell 0.3 percent as retailers continued to discount merchandise to lure shoppers into stores. Car prices edged down 0.1 percent, while prescription drug costs jumped 0.6 percent.