By Shobhana Chandra
July 16 (Bloomberg) -- Consumer prices in the U.S. probably rose in June by the most in seven months as Americans paid more for fuel and food, a government report today may show.
The cost of living increased 0.7 percent after a 0.6 percent gain in May, according to the median forecast of 79 economists surveyed by Bloomberg News. Excluding food and energy, so-called core prices probably climbed 0.2 percent, the survey showed.
The figures underscore why Federal Reserve Chairman Ben S. Bernanke yesterday said inflation risks had ``intensified.'' The surge in energy costs has also slowed consumer and business spending, hurting growth and making it less likely policy makers will boost interest rates to stem even bigger price increases.
``Concern about inflationary developments and the resiliency of consumer spending has pushed the Fed to the sidelines,'' said Steven Wood, president of Insight Economics LLC in Danville, California.
The Labor Department's consumer-price report is due at 8:30 a.m. in Washington. Survey forecasts ranged from gains of 0.2 percent to 1.1 percent. Prices probably rose 4.5 percent from a year earlier, the most since September 2005.
A Fed report at 9:15 a.m. may show industrial production rose 0.1 percent in June, the first increase in three months, according to economists surveyed.
Energy costs will continue stoking price pressures. Crude oil futures reached a record $147.27 a barrel on July 11 and have risen almost 90 percent in the past year. Regular gasoline, which topped $4 a gallon for the first time in June, is rising further this month, AAA figures show.
Wholesale Prices
Wholesale prices rose 1.8 percent in June, the most in seven months, the Labor Department reported yesterday. From a year ago, prices climbed 9.2 percent, the biggest surge since 1981.
``There are tremendous price pressures in the inflation pipeline,'' said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. ``But it is less clear if they will be successfully passed along to consumers.'' That's why the CPI data will be of ``heightened importance.''
Americans trimmed purchases of automobiles, furniture and restaurant meals last month as the cost of gasoline soared, a Commerce Department report showed yesterday. Retail sales rose 0.1 percent, less than forecast, a sign the boost from the tax rebate checks is already fading.
Bernanke, testifying before Congress yesterday as part of his semi-annual report on the economy, cited ``significant downside risks to the outlook for growth'' in addition to the heightened threat of inflation.
Less Spending
Consumer spending is ``likely to be restrained over coming quarters,'' and businesses are ``likely to be cautious with their spending in the second half of the year,'' Bernanke said.
Companies, unable to fully recover ballooning raw-material costs by raising prices, have cut staff and reduced equipment purchases as profits shrink.
Kimberly-Clark Corp., the maker of Huggies diapers and Scott paper towels, said earnings for this year will trail its previous forecast as expenses rise more than twice as fast as predicted, In May, the company said it would raise prices for a second time this year to counter higher costs for materials such as oil, natural gas and pulp.
``Inflation has outpaced our ability to offset higher costs in the near term through price increases, cost reductions and other measures,'' Thomas Falk, the Dallas-based company's chief executive officer, said this week in a statement.
Procter & Gamble Co., the maker of Tide detergent and Head & Shoulders shampoo, last week said it'll raise prices as much as 16 percent due to higher costs for plastic, energy and paper. The increases start in September and are the Cincinnati-based company's steepest in at least 18 months.
Bloomberg Survey
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CPI Core Ind. Cap.
CPI Prod. Util.
MOM% MOM% MOM% %
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Date of Release 07/16 07/16 07/16 07/16
Observation Period June June June June
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Median 0.7% 0.2% 0.1% 79.4%
Average 0.7% 0.2% 0.1% 79.4%
High Forecast 1.1% 0.4% 0.5% 79.7%
Low Forecast 0.2% 0.1% -0.4% 79.0%
Number of Participants 79 78 78 67
Previous 0.6% 0.2% -0.2% 79.4%
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4CAST Ltd. 0.9% 0.2% 0.3% 79.5%
Action Economics 0.8% 0.2% 0.3% 79.5%
AIG Investments 0.7% 0.3% -0.2% ---
Aletti Gestielle SGR 0.8% 0.2% -0.3% 79.0%
Allianz Dresdner Economic 0.7% 0.2% 0.1% 79.4%
Argus Research Corp. 0.6% 0.2% 0.1% 79.5%
Banc of America Securitie 0.5% 0.2% 0.4% 79.4%
Bank of Tokyo- Mitsubishi 0.7% 0.2% 0.1% 79.3%
Bantleon Bank AG 0.7% 0.2% 0.1% ---
Barclays Capital 0.9% 0.2% 0.4% 79.6%
BBVA 0.6% 0.2% -0.3% 79.2%
BMO Capital Markets 0.7% 0.2% 0.2% 79.4%
BNP Paribas 0.9% 0.2% 0.0% 79.3%
Briefing.com 0.7% 0.2% 0.2% 79.4%
Calyon 0.7% 0.2% 0.1% 79.4%
CFC Group --- --- 0.1% 79.5%
CIBC World Markets 0.7% 0.2% -0.1% 79.4%
Citi 0.7% 0.1% -0.4% 79.0%
ClearView Economics 0.5% 0.2% -0.2% 79.0%
Commerzbank AG 0.8% 0.2% 0.0% 79.3%
Credit Suisse 0.8% 0.2% 0.5% 79.7%
Daiwa Securities America 0.5% 0.2% -0.1% 79.3%
Danske Bank 0.5% 0.2% 0.0% 79.4%
DekaBank 0.7% 0.2% 0.2% 79.4%
Desjardins Group 0.6% 0.1% 0.0% 79.3%
Deutsche Bank Securities 0.6% 0.2% 0.0% 79.4%
Deutsche Postbank AG 0.6% 0.2% 0.1% ---
Dresdner Kleinwort 0.7% 0.2% -0.1% 79.2%
DZ Bank 0.6% 0.2% 0.0% 79.2%
First Trust Advisors 0.8% 0.2% 0.0% 79.2%
Fortis 0.7% 0.3% 0.3% ---
FTN Financial 0.2% 0.2% -0.1% 79.2%
GCI Capital 0.8% 0.4% --- ---
Global Insight Inc. 0.9% 0.2% 0.5% ---
Goldman, Sachs & Co. 0.7% 0.2% 0.0% 79.3%
H&R Block Financial Advis 0.6% 0.2% 0.1% 79.4%
Helaba 0.7% 0.2% -0.2% 79.3%
High Frequency Economics 0.7% 0.2% 0.3% 79.6%
Horizon Investments 0.7% 0.2% 0.1% 79.5%
HSBC Markets 0.7% 0.2% -0.1% 79.2%
IDEAglobal 0.8% 0.2% 0.3% 79.7%
ING Financial Markets 0.7% 0.2% -0.1% 79.4%
Insight Economics 0.6% 0.3% 0.1% 79.2%
Intesa-SanPaulo 0.7% 0.2% 0.1% ---
J.P. Morgan Chase 0.8% 0.2% 0.5% 79.7%
Janney Montgomery Scott L 1.1% 0.3% -0.3% 79.0%
JPMorgan Private Client 0.6% 0.2% -0.1% 79.3%
Landesbank Berlin 0.5% 0.3% -0.3% 79.0%
Lehman Brothers 0.8% 0.2% 0.0% 79.3%
Lloyds TSB 0.7% 0.3% 0.2% 79.4%
Maria Fiorini Ramirez Inc 0.8% 0.2% 0.0% 79.3%
Merk Investments 0.9% 0.2% -0.1% 79.4%
Merrill Lynch 0.8% 0.2% 0.4% 79.6%
Moody's Economy.com 0.5% 0.2% -0.2% 79.1%
Morgan Stanley & Co. 0.8% 0.2% 0.5% 79.7%
National Bank Financial 0.8% 0.2% --- ---
National City Corporation 0.5% 0.2% 0.2% 79.5%
Natixis 0.7% 0.2% -0.2% 79.4%
Newedge 0.6% 0.2% 0.0% ---
Nomura Securities Intl. 0.8% 0.2% -0.2% 79.1%
Nord/LB 0.7% 0.2% -0.1% 79.2%
Okasan Securities 1.0% 0.2% 0.3% 79.3%
PNC Bank 0.7% 0.2% 0.3% 79.5%
RBS Greenwich Capital 0.7% 0.2% 0.3% ---
Ried, Thunberg & Co. 0.8% 0.2% 0.4% 79.6%
Schneider Trading Associa 0.7% 0.3% 0.3% 79.5%
Scotia Capital 0.8% 0.2% 0.1% 79.5%
Societe Generale 0.9% 0.2% 0.2% 79.4%
Standard Chartered 0.7% 0.2% -0.1% 79.3%
Stone & McCarthy Research 0.6% 0.2% -0.1% 79.2%
TD Securities 0.7% 0.2% 0.0% ---
Thomson Financial/IFR 0.8% 0.3% -0.3% 79.1%
UBS Securities LLC 0.8% 0.2% 0.2% ---
Unicredit MIB 0.6% 0.2% 0.0% 79.2%
University of Maryland 0.7% 0.2% 0.3% 79.6%
Wachovia Corp. 0.7% 0.2% 0.0% 79.3%
Wells Fargo & Co. 0.7% --- 0.3% 79.5%
WestLB AG 0.6% 0.2% -0.1% 79.3%
Westpac Banking Co. 0.5% 0.2% -0.1% ---
Wrightson Associates 0.8% 0.2% 0.4% 79.6%
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To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
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