By Amara Omeokwe 

WASHINGTON -- U.S. consumer prices rose in July on higher costs for a range of products and services, a sign of firming inflation as demand for goods rebounded following steep declines earlier in the coronavirus pandemic.

The consumer-price index -- which measures what consumers pay for everyday items including driving fuel, clothing and electricity -- climbed a seasonally adjusted 0.6% in July, the Labor Department said Wednesday. The rise was the second in as many months. The index also rose 0.6% in June, which was seen as a potential turning point for consumer prices, following declines in March, April and May amid the pandemic's initial economic fallout.

"What we're seeing is largely a rebound in prices that were depressed because of the pandemic," said Scott Brown, chief economist at Raymond James & Associates, who pointed to strong price gains in July for items such as transportation services, apparel and used vehicles.

Gasoline prices jumped 5.6% in July and accounted for roughly a quarter of the increase in the overall index, the Labor Department said. Prices for used vehicles rose 2.3% on the month.

Mr. Brown said such increases likely reflected that people driving more, as states continue to reopen their economies and some flight-wary consumers opt to drive to vacation and other destinations.

Excluding the often-volatile categories of food and energy, so-called core prices rose 0.6%, compared with a 0.2% increase in June, posting their largest month-to-month increase since January 1991.

Economists surveyed by The Wall Street Journal expected a 0.3% increase for the overall consumer-price index, and a 0.2% gain for the core index.

The July CPI readings "should end any speculation that the pandemic-related slump in demand will quickly push the economy into a deflationary spiral," said Paul Ashworth, chief U.S. economist at Capital Economics, in a note to clients.

Roughly a quarter of the July increase was due to gasoline prices, the Labor Department said, which were up 5.6%. Prices for apparel and used vehicles also rose sharply. Notably, prices for food fell 0.4%, with grocery costs declining 1.1%, following significant increases earlier in the pandemic as Americans stayed at home.

The advance in overall consumer prices during July came despite a month when the U.S. saw a resurgence in coronavirus cases, which forced some states to put new restrictions in place aimed at containing the virus. Some states reimposed social distancing measures and business closures as a result.

The rise in consumer prices last month aligns with an increase in the producer-price index, a measure of the prices businesses receive for their goods and services. That index rose a seasonally adjusted 0.6% in July, the Labor Department reported Tuesday, the largest monthly rise since October 2018.

Longer-term trends suggest inflation remains subdued. On a non-seasonally adjusted basis, the overall consumer-price index rose 1% in July from a year earlier and core prices increased 1.6%.

"There's nothing to fear about inflation getting out of hand," Mr. Brown, of Raymond James, said.

Write to Amara Omeokwe at amara.omeokwe@wsj.com

(END) Dow Jones Newswires

August 12, 2020 12:42 ET (16:42 GMT)