The partial rebound in gasoline prices pushed up the consumer price average by 0.6 percent in June. This rebound will also boost consumer prices in July, though it should end after that, and monthly price increases should be fairly tame for the rest of the year. Previous COVID-19-related price declines are beginning to reverse for car insurance and rentals, clothing and airline tickets.
Food prices continued to increase faster than normal, especially meat prices. Outbreaks at meat processing plants have raised the price of beef by 25.1% from a year ago, pork by 11.8% and chicken by 8.7%. Egg prices are beginning to retreat from their high, declining in each of the past two months.
The price of medical services is up 6%, but this rise started before the virus. It has mostly been driven by rising health insurance costs (up 19.4%) and hospital charges (up 5%). Prices for admission to sporting events have risen as capacity has been cut because of social distancing measures.
Housing prices may jump in the second half of the year as low mortgage rates cause the demand for homes to surge in the face of low inventory. For the moment, though, home prices are rising at a slower-than-normal pace.
The inflation rate should end the year at 0.7%, far below last year’s 2.3%. Core inflation, which excludes the costs of food and energy, will continue to run higher than the headline rate, at about 1.2% over the course of this year.
A note about data reliability: An issue that government data collectors face is that at the moment, they cannot go into stores that are shut down and collect price data. Therefore, the reliability of some of the numbers may be suspect, though the Bureau of Labor Statistics managed to obtain three-fourths of its normal price quotes online and through other means. The BLS also has statistical procedures in place to keep missing data from biasing the overall numbers.