Consumer prices rose by a larger-than-expected 5.4 percent over the past year, the biggest 12-month increase in the U.S. inflation rate since August 2008, said the Labor Department on Tuesday. Prices for restaurant meals, carry-out food, food from vending machines, and snacks were up by a strong 4.2 percent as the food service sector reopened after pandemic restrictions.
The Bureau of Labor Statistics said higher prices for used cars and trucks accounted for one-third of U.S. inflation during June. Prices for gasoline and used cars and trucks were up by 45 percent from a year ago, during the depths of the economic slump. The price of hotel rooms was also a factor in the rising inflation rate, along with the cost of hot food.
The 4.2 percent rise in the Consumer Price Index for “food away from home” was the largest increase since the year ending in May 2009, said the BLS. “The index for limited-service meals rose 6.2 percent since June 2020, and the index for full-service meals rose 4.1 percent over the last 12 months.” The cost of food in schools and employee sites plunged by nearly 30 percent.
While the annual inflation rate for food away from home has increased each month since April, grocery prices have moderated. They started the year at a 3.7 percent annual inflation rate but have slowed to a 0.9 percent rate at present. Americans spend nearly 14 cents on food — 7.6 cents for groceries and 6.2 cents for food away from home — of each $1 in consumer spending.
Economist Scott Irwin of the University of Illinois said the BLS report could represent both an inflationary spike and an indication of a higher long-term inflation rate. “Why both? Supply bottlenecks created by reopening the economy are real and widespread,” he said on social media. “At the same time, the amount of fiscal stimulus we have administered is mind-blowing.”