US Inflation Eases in July 2013, Yet Annual Inflation Rate at 2%
Inflation in the US rose more modestly in July but ticked higher on a 12-month basis, the Labor Department reported Thursday, August 15, 2013.
American consumers saw some relief as gas, food, new vehicle and clothing costs climbed slower than during the start of summer.
Consumer prices increased 0.2% in July after a 0.5% gain in June, the Bureau of Labor Statistics (BLS) said in its monthly report on the Consumer Price Index (CPI) which measures how much Americans pay for certain goods and services. June’s uptick was much higher than expected whereas last month’s gain was in line with economists’ expectations.
As is usually the case, gasoline was the biggest expense for most Americans with prices at the pump up 1.0% — a stark contrast to the prior month’s 6.3% surge. Still, gas prices are 5.2% higher than a year ago.
Food prices rose 0.1% in July compared to 0.2% in June. But again, the longer term pain on Americans’ pocket books is there as they have jumped 1.4% over the past 12 months. Higher grocery items last month included fruits and vegetables by 2.4% as well as meats, poultry, fish, and eggs by 0.2%. Down were nonalcoholic beverages by 0.6%, cereals and bakery products by 0.3%, and dairy and related products by 0.1%.
Excluding energy and food, the so-called core US inflation rate grew 0.2% in July. Core prices rose by the same amount in June and May.
"There still is a fundamental issue of purchasing power for U.S. consumers" as they’re demanding discounts and keeping core inflation tame, said BNP Paribas’s Coronado according to Bloomberg News. Prices "will only shift gradually over time."
Some specific core items to rise included:
- Clothing by 0.6%
- New vehicles by 0.1%
- Medical care (0.4% for commodities and 0.1% for services)
- Transportation by 0.4%
- Shelter and rent by 0.2%
- Tobacco by 1.4%
Lower items included a drop in used cars by 0.4% and airline fares by 1.7%.
US inflation over the last 12 months advanced 2.0%, the biggest increase since February, after gaining 1.8% in the 12 months ended June. Other annual inflation rates reported by the BLS for 2013 included increases of 1.4% for May, 1.1% for April, 1.5% in March, 2% in February and 1.6% in January.
Core US inflation year-over-year gained 1.7% through July. The core 12-month inflation rate was reported at 1.6% in June. Going back further, advances tallied to a matching 1.7% in May and April, 1.9% in March, 2.0% in February and 1.9% in each of the three months before then.
The 12-month core inflation rate is a benchmark closely watched by the Federal Reserve as it helps decide where the central bank sets its key interest rate. The latest 1.7% gain remains below the Fed’s 2% inflation target.
"The data continues to improve and impress the marketplace and I think the data will continue in this direction. Then the question becomes not whether they are (Fed) tapering in September, but how much," Reuters quoted Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York
Major consumer goods and services and their change in prices in January to July and over the past 12 months are found below.
January 2012 – July 2013 Consumer Prices – Gains & Losses in Percent
|Jan 2013||Feb 2013||Mar 2013||Apr 2013||May 2013||June 2013||Jul 2013||12
|Food at home||.0||0.1||-0.1||0.1||-0.3||0.2||0.1||1.0|
|Food away from home||0.1||0.1||0.2||0.3||0.2||0.2||0.2||2.1|
|Gasoline (all types)||-3.0||9.1||-4.4||-8.1||.0||6.3||1.0||5.2|
|Utility (piped) gas service||-1.7||1.2||1.0||4.4||2.4||-0.4||-2.8||8.8|
|All items less food, energy||0.3||0.2||0.1||0.1||0.2||0.2||0.2||1.7|
|Comm. less food, energy||0.2||.0||-0.1||.0||.0||0.2||.0||-0.2|
|Used cars and trucks||0.2||0.8||1.2||0.6||-0.1||-0.4||-0.4||-2.1|
|Services less energy||0.3||0.2||0.2||0.1||0.2||0.2||0.2||2.4|
US inflation information is gathered by the US Bureau of Labor Statistics. The BLS will report the next round of inflation data in the form of the Consumer Price Index (CPI) on September 17, 2013 at 8:30 AM ET. This upcoming data will include changes in consumer prices for goods and services through August 2013.
CPI data from the BLS is used to calculate inflation rates as well as this site’s inflation calculator. The calculator shows accumulated inflation and the change in the buying power of the US dollar from one date to another.