US consumer prices rose for a fifth straight month in June as the cost of gasoline and a range of other goods increased, further signs of firming inflation that strengthen the case for an interest rate hike this year.
Other data yesterday suggested the economy could support a tightening of monetary policy. Housing starts surged in June and building permits soared to a near eight-year high. Federal Reserve Chair Janet Yellen this week affirmed the US central bank was keen to start raising interest rates later this year.
“The barriers to a Fed hike are starting to crumble. The wait for the first rate hike may not be that much longer,” said Joel Naroff, of Naroff Economic Advisors in Holland, Pennsylvania.
The Labor Department said its Consumer Price Index rose 0.3 per cent last month after increasing 0.4 per cent in May. Last month’s increase pushed the year-on-year CPI rate into positive territory for the first time since December.
The energy-driven disinflationary trend appears to have run its course, with producer prices rising in June for a second straight month.
In a separate report, the Commerce Department said groundbreaking for new homes rose 9.8 per cent to a seasonally adjusted annual pace of 1.17 million units in June. Permits for future home construction increased 7.4 per cent to a 1.34 million-unit rate, the highest level since July 2007.