On a monthly basis, the broadest measure of inflation rose at a pace of 1.3%, inching up from 1% in May and climbing at a faster tempo than the 1.1% climb economists had projected. This marked the largest monthly increase since 2005. "The Administration tried to get out in front of the bad economic news, and tell us the inflation report was going to be ugly this month, but it was even worse than markets imagined in their wildest dreams," FWDBONDS Chief Economist Christopher Rupkey said in emailed commentary.
U.S. stocks were slammed early Wednesday following the hotter-than-expected print. The S&P 500 dropped 1.3% at the open, while the Nasdaq shed 1.7%, and the Dow fell 1.1%.
The continued surge in inflation across the U.S. economy was elevated by broad-based increases, including high food costs and record gasoline prices, which topped more than $5 per gallon at the pump last month.
“Core” CPI, which excludes the more volatile food and energy components, rose 5.9% in June, compared to 6.0% in May. Economists expected a 5.7% increase in this measure.
The report's energy index soared 7.5% in June and 41.6% over the last year, marking the largest 12-month increase since the period ending April 1980. Meanwhile, the component of the report tracking food prices increased 1% over the month and 10.4% annually, the biggest 12-month increase since the period ending February 1981.
