Cars are driving up inflation

The U.S. consumer index price jumped significantly in June, registering increases of 0.9 percenct from May and 5.4 percent year-over-year, Bloomberg reports.
Cars — used, new, rental, you name it — were the main culprit behind the surge, but there are signs that could soon change, and the Federal Reserve and many economists remain confident that inflation is still transitory.
The White House Council of Economic Advisers noted that, in addition to cars, several sectors heavily affected by the COVID-19 pandemic, like airfare, hotels, and live events were at the heart of the increase. Excluding those industries, core inflation actually increased more slowly in June than the previous two months, the council found.
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As Carl Tannenbaum, the chief economist for Northern Trust, put it, the June increase was "once again driven by an outsized increase in the price of a small category," while "bigger components (like shelter) are still well-behaved."
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Tim is a staff writer at The Week and has contributed to Bedford and Bowery and The New York Transatlantic. He is a graduate of Occidental College and NYU's journalism school. Tim enjoys writing about baseball, Europe, and extinct megafauna. He lives in New York City.
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