May. Although a monthly rise of 0.1 percent is considered to be a benign indicator of inflation, the May report did cause some concern among economists. For the past 12 months, the CPI has increased 3.1 percent and the average rate of increase in the last 6 months is one-half percent greater than for the preceding 6 months.
Some economists feel that the inflation rate is accelerating.
The CPI is expected to rise in June, led by increased gasoline prices. The apparent cause of the increase in inflationary pressures is consumer demand. The strong economy has been buoyed by consumer spending and companies have apparently reacted by raising prices. In other inflationary episodes labor costs have initiated retail price hikes, but there is little evidence in this instance to blame labor cost increases. When labor cost increases exceed productivity gains, firms first try to pay for these increased costs by cutting profits.