Almost everything that consumers spent money on last month - including food, electricity and gasoline - took a bigger piece of their paychecks.
Inflation in June rose at the fastest rate in 17 years, the government said yesterday, a day after the chairman of the Federal Reserve warned that inflation poses a significant risk to the nation's economic outlook.
The Consumer Price Index, which measures the prices of a batch of common household products, rose 1.1 percent in June, the Labor Department said, capping a year in which inflation has surged to levels considered by some a threat to the stability of the economy. In the past 12 months, the price index has risen 5 percent, the biggest annual jump since May 1991.
The report reinforces what many economists, including those at the Fed, have warned about for months: Americans are paying significantly higher prices while the job market weakens and big employers such as General Motors lay off thousands of employees.
"There's not enough lipstick to put on this pig," Richard Moody, an economist at Mission Residential, wrote in a note to clients. "No matter how one slices and dices, the bottom line is that U.S. workers are falling farther and farther behind."
Inflation accelerated nearly twice as fast in June as in May, when the index grew 0.6 percent. It was the biggest monthly gain in the closely watched inflation indicator since September 2005.
Testifying for a second day on Capitol Hill, Fed Chairman Ben S. Bernanke reiterated his concern, saying that inflation remains too high.
"Upside risks to the inflation outlook have intensified lately," he told lawmakers, "as the rising prices of energy and some other commodities have led to a sharp pickup in inflation and some measures of inflation expectations have moved higher."
It is a Fed priority to bring inflation "to an acceptable level consistent with price stability," Bernanke said.
"As we go forward," he said, "my colleagues and I are going to have to see how the data come in and how the outlook is changing, and try to find the policy that best balances those risks and best achieves our mandate of sustainable growth and price stability."
The increase in the index released yesterday largely stemmed from record high prices for crude oil, which pushed the price of gasoline up more than 10 percent last month. Energy prices rose 6.6 percent, and transportation costs 3.8 percent.
