July Inflation Up 3.2% Annually

Washington, DC, August 10, 2023-The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2% in July on a seasonally adjusted basis, the same increase as in June, the U.S. Bureau of Labor Statistics reported.

Over the last 12 months, the all-items index increased 3.2% before seasonal adjustment.

The index for shelter was by far the largest contributor to the monthly all items increase, accounting for over 90% of the increase, with the index for motor vehicle insurance also contributing. The food index increased 0.2% in July after increasing 0.1% the previous month. The index for food at home increased 0.3% over the month while the index for food away from home rose 0.2% in July. The energy index rose 0.1% in July as the major energy component indexes were mixed.

The index for all items less food and energy rose 0.2% in July, as it did in June. Indexes which increased in June include shelter, motor vehicle insurance, education, and recreation. The indexes for airline fares, used cars and trucks, medical care, and communication were among those that decreased over the month.

The all-items index increased 3.2% for the 12 months ending July, slightly more than the 3.0% increase for the 12 months ending in June. The all items less food and energy index rosem 4.7% over the last 12 months. The energy index decreased 12.5% for the 12 monthsending July, and the food index increased 4.9% over the last year.

According to the Wall Street Journal, “Annual U.S. inflation ticked up in July but underlying price pressures remained modest for the month, possibly deterring the Federal Reserve from raising rates in September.

“The consumer-price index, a measure of goods and services prices across the economy, rose 3.2% in July from a year earlier, up from 3% in the year through June, the Labor Department said Thursday. So-called core prices, which exclude volatile food and energy categories, rose by 4.7% in July from a year earlier, a slight cooling from June’s 4.8% increase.

“The monthly figures, however, offered a more encouraging picture of current price trends. The CPI rose a mild 0.2% in July, same as in June. Even better, the core CPI, also increased just 0.2% in both months, suggesting inflation isn’t starting to resurge. Fed officials focus on core inflation because they see it as a better predictor of future inflation than the overall inflation rate.

“The core CPI, in particular, could encourage the Fed to hold its benchmark interest rate steady at its September policy meeting. The new numbers lower the three-month annualized rate of core inflation to 3.1%, the lowest such reading in two years.”