Prices rise 5.4 percent in June over last year, largest spike since 2008, as economy continues to recover

Prices rose 5.4 percent in June compared with one year ago, reflecting upward surge in inflation throughout the economy, as more consumers open their wallets and supply chains struggle to bounce back from pandemic pressures.

Data released by the Bureau of Labor Statistics on Tuesday showed that prices rose 0.9 percent in the past month, a hike after prices also rose 0.6 percent in May. The price hike in June marked the largest 1-month spike since June 2008.

Still, policymakers at the Federal Reserve and White House continue to predict that as the economy has time to heal, the surge in inflation will cool and overall prices will settle back down. They maintain that the sharp increases are a temporary feature of a bumpy economic recovery. Their expectation is that inflation will simmer down closer to the Fed’s 2 percent annual target next year and in 2023.

Prices for used cars and trucks continued their sharp rise, increasing 10.5 percent compared to the previous month, and 45.2 percent compared to last June. That rise accounted for more than one third of the seasonally-adjusted price increases. The used car market, which relies heavily on trade-ins and auto parts, has been dogged by a global microchip shortage and a supply chain backlog that keep new cars from rolling onto the market.

The cost of shelter is also picking up, with prices rising 0.5 percent in June compared to the previous month. All over the country, rent is starting to soar, adding strain to a housing market already marked by skyrocketing home prices. Housing has become a particularly unequal feature of the economic recovery, with economists paying special attention to rent increases that could be here to stay.

Snapshots of the consumer price index show how spending habits are changing as people resume their pre-pandemic spending habits. For example, the measure for “food away from home” — namely restaurant food — rose 4.2 percent over the last year, the largest 12-month increase in that index since May 2009.