The "official" inflation rate jumped to 0.5% in June due to a spike in fuel costs, says the Labor Department.

Bloomberg:

The median forecast in a Bloomberg survey called for a 0.3 percent rise. The biggest advance in gasoline prices in four months accounted for about two-thirds of the gain the in the CPI. The core measure, which excludes food and fuel, rose 0.2 percent, matching the May gain and the survey median.

Some retailers such as Pier 1 Imports Inc. (PIR) are prepared to reduce prices to attract shoppers should demand weaken. Inflation readings closer to the Fed's goal will give the central bank the flexibility to move forward later this year with reductions in its monthly asset purchases designed to stoke the economy.

"This is probably going to be a little bit comforting for some of the folks at the Fed who are worried about lower inflation," said Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut, who correctly forecast the CPI. "Inflation's still very subdued, still very well contained."

Stock-index futures were little changed after the report with the contract on the Standard & Poor's 500 Index expiring in September at 1,677.5 at 8:52 a.m. in New York.

The forecast for consumer prices was based on the median of 83 economists in a Bloomberg survey. Economists' estimates ranged from no change to a gain of 0.6 percent.

The results included the biggest increase in clothing costs since August 2011 and higher prices for medical care, new cars and household furnishings.

Overall consumer prices increased 1.8 percent in the 12 months ended in June, more than projected and after a 1.4 percent year-over-year gain the prior month.

The core CPI rose 1.6 percent from June 2012, in line with projections and following a 1.7 percent advance in the prior 12 month period.

Energy costs increased 3.4 percent from a month earlier. Gasoline prices jumped 6.3 percent, the most since February.

Food costs rose 0.2 percent, reflecting higher prices for cereals and meats. Automobile prices increased 0.3 percent.

Inflation is a tax that eats away at our standard of living. For the Fed to be cheering for higher inflation so they can slow down their monthly bond buying is indicative of a mind set that is out of touch with ordinary Americans.

They are not fooling anyone. The idea that the "official" rate of inflation for the last 12 months is 1.8% is ludicrous. The 70% of American wage earners who live basically paycheck to paycheck knows that their food dollars, their gas dollars, their entertainment dollars - and dollars they budget for extras like clothes and car repairs - are all buying less than they did last year.

The major reason the government won't publish the real inflation rate - the increase in prices of goods that most Americans buy-  is because it is probably near or in double figures. This would mean that government, unionized industries, and others would have to give increases in wages that reflect the real number, rather than the bogus number issued by the Labor Department.

If the Fed's plans don't pan out and we get into a spiral of hyperinflation, it will be very difficult to hide the real rate of inflation. Short of that scenario, don't expect changes in how they calculate the "official" rate of inflation.