WASHINGTON — A measure of consumer prices climbed more than forecast in June and manufacturing stalled, highlighting the dilemma faced by Federal Reserve policy makers as they seek to boost growth without stoking inflation.
Consumer prices excluding food and energy climbed 0.3 percent for a second month, the biggest back-to-back gain in three years, the Labor Department said on Friday. Factory production was unchanged last month, data from the Fed showed.
An unexpected decline in consumer sentiment, also reported Friday, signaled that households are being squeezed by mounting unemployment, rising costs and a slumping housing market. At the same time, the pickup in prices makes it more difficult for the Fed to adopt fresh measures to spur growth.
“There’s little additional action that the Fed can take right now,” said Dean Maki, chief U.S. economist at Barclays Capital in New York. “The critical issue is whether consumer spending improves or stays quite weak.”
The biggest drop in energy costs since 2008 masked growing inflation in other goods and services such as autos, clothing and hotel rates, Friday’s Labor Department report showed. Including food and energy, the Consumer Price Index decreased 0.2 percent, the first drop in a year, compared with the 0.1 percent drop forecast by economists.
Numbers
0.2% Decline in consumer prices, the first in a year
0.3% Rise in “core” prices, excluding food and gasoline
