WASHINGTON (AP) — A measure of U.S. consumer prices likely rose in June, led by a steep increase in energy costs. But overall inflation is expected to have stayed tame.
Economists forecast the consumer price index increased 0.3 percent in June. Core prices, which exclude volatile food and energy, are expected to have risen 0.2 percent, according to a survey by FactSet.
The Labor Department will release the report at 8:30 a.m. EDT Tuesday.
In May, consumer prices rose 0.1 percent and were up just 1.4 percent over the past 12 months. Core prices rose 0.2 percent and just 1.7 percent over the past 12 months. Both inflation measures for the past year are below the Federal Reserve's 2 percent inflation target.
Slow economic growth and high unemployment have kept wages from rising quickly. That has made it harder for retailers and other firms to raise prices.
Tame inflation has helped consumer increase spending this year despite slow income growth and higher Social Security taxes. It has also given the Fed room to continue efforts to try to boost economic growth.
At its meeting in June, the Fed said it plans to keep the short-term interest rate it controls at a record low near zero until the unemployment rate falls below 6.5 percent, provided inflation remains under control. Unemployment is 7.6 percent.
The Fed also said it would continue purchasing $85 billion in mortgage and Treasury bonds each month. The purchases are intended to lower long-term rates and encourage more borrowing and spending.
Chairman Ben Bernanke is scheduled to deliver the Fed's mid-year report to Congress on Wednesday and Thursday this week. Investors will pay particularly close attention as Bernanke's comments over the past month have caused markets to gyrate wildly.
After the June meeting, Bernanke said the Fed could slow those purchases later this year and end them next year if the economy continued to strengthen. Stocks plunged. The Dow Jones industrial average lost 560 points in two days.
But since then, the chairman and other Fed officials have sought to calm investors. They have stressed that any pullback in the bond purchases depends on clear evidence of improvement the economy and job market— not a target date. And last week Bernanke told a conference in Boston that the economy still needs help from the Fed's low interest rate policies.
Stocks surged. The Dow Jones industrial average and the Standard & Poor's 500 stock index reached all-time highs.
Most analysts expect Bernanke to stick with last week's message.
The data has been mixed. Hiring has improved since the Fed's stimulus program began. Employers have created an average of 202,000 jobs a month this year, up from 180,000 in the previous six months.
Still, unemployment remains elevated and economic growth weak. Most economists expect growth slowed from April through June to an annual rate below 1 percent. That would be down from a subpar 1.8 percent annual rate from January through March and the third straight quarter of tepid growth.
Many expect growth will rebound to around 2.5 percent in the second half of the year. Stronger job growth is likely to boost income and consumer spending. At the same time, the impact of higher taxes and spending cuts are expected to fade.