updated 7/14/2005 11:11:09 AM ET 2005-07-14T15:11:09

Inflation pressures on the consumer were absent for a second straight month in June, reflecting another drop in energy costs, the government reported Thursday.

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The Labor Department said that its Consumer Price Index was unchanged in June after having posted a 0.1 percent decline in May. The good news in both months came from sharp declines in gasoline and other energy products.

But with oil prices in recent weeks hitting record highs, consumers are already seeing a new surge in gasoline pump prices which will likely translate into a jump in inflation pressures in July. Outside of food and energy, inflation was well contained in June, rising a slight 0.1 percent, the same increase as in May.

So far this year, consumer inflation is rising at annual rate of 3.1 percent, compared to a gain of 3.3 percent for all of 2004.

The Federal Reserve has boosted a key interest rate it controls nine times over the past year in an effort to make sure that the rebounding economy does not trigger inflation pressures.

The central bank has been able to move at a gradual pace because outside of energy, there have been few indications that inflation is accelerating. Analysts are looking for a 10th quarter-point rate hike when the Fed next meets in August.

For June, energy prices fell by 0.5 percent following an even bigger 2 percent drop in May. Those declines followed big increases in energy costs in the previous three months. Last month, gasoline prices dropped 1.2 percent and natural gas prices plunged 3.5 percent, the steepest fall in nearly four years.

But analysts are forecasting another round of energy price increases reflecting the fact that global oil prices have soared to record levels above $60 per barrel for crude oil.

Food costs were unchanged in June as the price of vegetables, beef and dairy products were all down.

Outside of the volatile food and energy sectors, the so-called core rate of inflation has been rising this year at a moderate annual rate of 2.2 percent.

The price moderation in June was helped by a 0.7 percent decline in clothing costs, the third drop in this category in the past five months.

The cost of new cars was unchanged in June, reflecting aggressive discounting by automakers trying to reduce a backlog of unsold cars.

Bucking the trend of moderate or falling prices, airline ticket costs jumped 2.3 percent in June as airlines boosted prices to compensate for rising fuel costs.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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