Consumer prices rise 0.7% in June
Key measure of inflation up more than expected, but last year's record-high gas prices trigger largest annual decline since January 1950.
NEW YORK (CNNMoney.com) -- A key index of consumer prices rose more than expected in June but showed the largest year-over-year decline since January 1950, the government said Wednesday.
The Consumer Price Index, the Labor Department's key measure of inflation, has fallen 1.4% over the past year.
That's the largest drop in more than 59 years, and is due largely to a 25.5% over-the-year decline in the energy index.
"It's a bit of a bogus comparison, because we're comparing gas prices at nearly their astronomical peak last year," said Stuart Hoffman, economist at PNC, referring to the the-record high price of $4.114 per gallon reported on July 17, 2008.
On a monthly basis, CPI rose 0.7% in June, after rising 0.1% the previous month. Economists surveyed by Briefing.com expected a 0.6% increase.
That's the largest monthly increase in 11 months. CPI also rose 0.7% in July 2008, Hoffman said.
The report attributed the month-to-month increase to the gasoline index, which rose 17.3% in June. But a decline of 1.9% in the electricity index helped offset the gas price jump, causing the overall energy index to settle up 7.4%.
Core CPI and inflation: The even more closely watched core CPI, which excludes volatile food and energy prices, increased 0.1% on an annual basis, after gaining the same amount in May. Core CPI increased 1.7% on an annual basis.
"It's comforting to know gas prices are the main fly in the ointment," Hoffman said. "That shows inflation is not a concern."
The July reading due next month is likely to reflect the recent decline in gas prices. According to a daily survey conducted for motorist group AAA, prices have declined 24 straight days, by a total of about 7%.
Inflationary concerns would arise if the core CPI rose 0.3%-0.4% for a few months straight, Hoffman said. Conversely, if the core stayed flat for consecutive months it would trigger deflation worries, he said.
Sector-by-sector: Most sectors saw at least a small uptick. The indexes for shelter and medical care posted slight increases in June, and indexes for new vehicles, used cars and trucks, recreation and apparel increased at least 0.5%.
The food index, which had fallen for the last four months, was unchanged in June.
The index for airline fares bucked the trend, though, falling 0.6%. 
