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Prices in June jumped the most since 2008, led by gasoline costs

A customer fuels up at a gas station

A customer fuels up at a gas station in Dix Hills on July 8. In the metropolitan area, consumer prices rose in June on a 40% spike in the cost of gasoline that's tied to less driving during the pandemic.  Credit: Raychel Brightman

Consumer prices in the metropolitan area increased in June by the most since 2008, largely because of a 40% spike in the cost of gasoline over the past year.

The federal Bureau of Labor Statistics said Tuesday its consumer price index for the 25-county region that includes Long Island rose 4.1% last month compared with June 2020.

That’s the largest year-over-year increase since October 2008, said Martin Kohli, the bureau’s chief regional economist in Manhattan.

COVID's role

The 40.1% rise in gas prices is due in large part to COVID-19. In June 2020, pump prices were depressed because the economy was still partially shut down to slow the virus’ spread.

Gas prices were up 1.8% last month compared with May.

The cost of groceries climbed 0.2% in June compared with a year earlier.

Prices for used automobiles and natural gas were up 45.3% and 7.6%, respectively, year over year. The cost of clothing was up 10.6%.

These increases were partially offset by falling prices for electricity, down 0.4% from June 2020, and medical care, down 0.3%.

Richard Vogel, an economist and dean of Farmingdale State College’s business school, said higher consumer prices aren't a surprise given that the Long Island economy is recovering from the pandemic, but raw materials such as crude oil remain in short supply.

"I’m not that concerned about inflation because a lot of this is temporary," Vogel said on Tuesday. "This is coming from labor shortages that have increased wages, in some cases, and supply chain disruptions – both caused by the pandemic."

National numbers

Nationwide, the consumer price index climbed 5.4% in June compared with a year earlier. Like the local increase, that’s the largest year-over-year gain since 2008.

Economists attributed much of the national index’s rise to the higher cost of gasoline and used automobiles, each up more than 45% from June 2020.

The cost of natural gas and transportation services climbed 15.6% and 10.4%, respectively, year over year.

"Pent-up reopening demand, rising producer prices and rising labor costs are all putting upward pressure on consumer prices," said Scott Anderson, chief economist at Bank of the West in San Francisco. "We are forecasting consumer inflation to remain stubbornly high through the end of the year."

Still, Curt Long, chief economist at the National Association of Federally-Insured Credit Unions in Washington, said he doesn’t expect the Federal Reserve to raise interest rates "in the near future as long as unemployment remains elevated."

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