THE ECONOMY

Consumer prices shot up in June at the second-fastest pace in 26 years. Two-thirds of the surge stems from soaring energy prices.

The Labor Department says consumer prices jumped 1.1 percent last month, much worse than expected. Energy prices rocketed up by 6.6 percent, reflecting big gains for gasoline, home heating oil and natural gas.

The rise in prices cut deeply into consumers’ earning power, with average weekly wages, after adjusting for inflation, falling by 0.9 percent.

Over the past 12 months, consumer inflation is up by 5 percent, the largest year-over-year gain since a 5 percent rise in May 1991.

Food prices also showed a significant increase in June, rising by 0.7 percent, more than double the 0.3 percent increase of May. Vegetable prices shot up by 6.1 percent, the biggest increase in nearly four years.

Core inflation, which excludes energy and food, showed rising pressures, too, with an increase of 0.3 percent in June, up from a 0.2 percent gain in May and the biggest one-month rise since January. This increase reflected a 4.5 percent jump in airline ticket prices, the biggest one-month rise for airline fares since June 2001.

Industrial output rose 0.5 percent in June, the fastest pace in 11 months, the Federal Reserve reported. The increase, the highest since a 0.6 percent gain in July of last year, reflected an end to an automotive production strike rather than any widespread strength in the economy.

The cost of a barrel of crude is about 80 percent higher than it was a year ago and 40 percent higher than at the start of the year, even with this week’s two-day slide in the price of oil.

As recently as Friday, crude oil traded at record levels above $147 a barrel.

From wire reports