Consumer prices rose 0.5% in July, the biggest jump since March, driven by increases in food, energy, apparel and shelter, the U.S. Bureau of Labor Statistics said Thursday.
Prices were up 3.6% for the last 12 months, well above the Federal Reserve's target rate of 2%. Underlying inflation, which exempts food and energy prices, was up only 0.2%, slightly below the previous two months. The CPI for June was down 0.2%, largely on declining energy prices.
Energy prices led the increases, with the gasoline index rising 4.7%.Apparel was up 1.2%. Food overall was up 0.4%, with a 0.6% jump in food at home. Shelter prices rose 0.3%.
The data, combined with a disappointing report that showed an increase of 9,000 initial jobless claims to 408,000 and continued concerns over Europe's financial stability, sent stocks down during early trading Thursday, with the Dow shedding 3%, the NASDAQ 4% and the S&P 3.3%.