Inflation stayed high in July, with U.S. consumer prices rising 5.4% from a year ago as the economic recovery gained steam.
The consumer price index measures what consumers pay for goods and services, including groceries, clothes, restaurant meals, recreation and vehicles.
Inflation has heated up this year for several reasons. U.S. gross domestic product rose at a rapid 6.5% seasonally adjusted annual rate in the second quarter, powered by consumer spending that climbed at an 11.8% pace as more people received vaccinations, businesses reopened and trillions of dollars in federal aid flowed through the economy.
Prices in categories hit hardest by the Covid-19 pandemic are still recovering to pre-pandemic levels, including for air travel, apparel, entertainment and recreation. Those price increases should slow once prices return to more normal levels, though the outbreak of the Delta variant of the Covid-19 virus could delay that process, many economists say.
Booming demand as the economy reopens has outpaced the ability of businesses to keep up. Many companies are passing on higher labor and materials costs to consumers. The shortage of semiconductors that has crimped auto production has caused prices to soar for new and used vehicles, as well as rentals.
