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Consumer prices rose 0.3% in June on big jump in gas costs

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Despite big rise in gas prices, overall inflation remained steady over the past year.

A big jump in how much Americans pay at the gas pump pushed consumer prices up 0.3% in June, but the overall inflation trend remained steady, the Labor Department said Tuesday.

The rise in the Consumer Price Index was less than the seasonally adjusted 0.4% increase in May. And for the 12 months ended in June, prices were up 2.1% -- the same annual rate as in May.

Gas prices surged 3.3% in June, the biggest jump in a year, as global tensions drove up oil prices.

The increase accounted for two-thirds of the overall rise in consumer prices last month, the Labor Department said.

Food prices barely increased, rising just 0.1% in June after a 0.5% rise the previous month.

Food and energy prices often are volatile. Stripping them out, so-called core consumer prices were up 0.1% in June. That was down from 0.3% the previous month.

The annual core inflation rate was 1.9% in June, down from 2% in May.

The Federal Reserve wants inflation to run at a 2% annual rate, though it uses a different measure based on personal consumption expenditures. That annual gauge rose in May to 1.8%.

Economists say some inflationary pressure is good for growth. Throughout the recovery from the Great Recession, Fed policymakers and other experts have been worried that inflation has been running too low.

But as economic growth improves, prices should start rising, fueled by the Fed's easy money policies.

"There is no risk of too-low inflation anymore. Inflation risks are all on the upside the next few years," said Chris Rupkey, chief financial economist at the Bank of Tokyo-Mitsubishi in New York.

With the risk of rising inflation, Fed policymakers will need to consider raising the central bank's benchmark short-term interest rate. The rate has been near zero since late 2008.
 

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