US Inflation Remains Subdued in July

U.S. inflation at the consumer level rose slightly in July and the annual rate of inflation picked up modestly, according to a report released by the Labor Department on Friday, August 11, but gains were softer than expected.

Rising costs in food, medical care, clothing, housing and transportation were mostly offset by falling prices in other areas like energy and vehicles.

Consumer prices climbed 0.1% in July after registering flat in June, the Labor Department said in its monthly report on the Consumer Price Index. The CPI measures what Americans pay for everything from cereal to cars.

Gasoline prices flattened for the month after dropping 2.8% previously. Prices at the pump rose 3% from a year earlier.

The broader index for energy, which combines items like gasoline, electricity and fuel oil, dipped 0.1% in July after falling 1.6% in June. The report shows energy prices up 3.4% from a year ago.

Food prices moved up 0.2% last month, their sixth advance in seven months. They were unchanged in June. They climbed 1.1% from a year earlier.

Stripping the more volatile food and energy components, so-called core consumer prices also rose 0.1% in July — the fourth straight matching increase.

Within the grouping, shelter costs picked up 0.1% following two consecutive increases of 0.2%. They advanced 3.2% over the past 12 months. Components of shelter include pricing items like rent, rental equivalence, lodging away from home, and housing at school.

Medical care commodities and services posted gains of 1% and 0.3%, and clothing costs moved up 0.3%. New vehicles and used cars and trucks each fell 0.5%.

U.S. inflation rose 1.7% from the same month a year ago after rising 1.6% previously. As recently as February, the annual inflation rate jumped 2.7% for largest increase since March 2012.

Core inflation also advanced 1.7% on an annual basis, the third such reading in a row and the smallest gain since May 2015. The core annual measure is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) as it helps the central bank decide where to set its key interest rate.

"The CPI data was very muted and not something which the Fed is going to be happy to look it," MarketWatch quoted Naeem Aslam, chief market analyst at Think Markets UK Ltd, in an email note. 

Forecasts before the government report showed expectations of a 0.2% increase in consumer prices for July and a year-on-year advance of 1.8%.

The following table of key inflation figures is for the last eight months through July, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi) on August 11, 2017. To index the data each month, the BLS monitors the prices of about 80,000 consumer goods and services from around the nation. All monthly and annual pricing changes are in percentages.

January to July 2017 Consumer Prices – Gains & Losses in Percent

  Jan 2017 Feb 2017 Mar 2017 Apr 2017 May 2017 June 2017 July 2017 12 Month
All items 0.6 0.1 -0.3 0.2 -0.1 .0 0.1 1.7
  Food 0.1 0.2 0.3 0.2 0.2 .0 0.2 1.1
    Food at home .0 0.3 0.5 0.2 0.1 -0.1 0.2 0.3
    Food away from home 0.4 0.2 0.2 0.2 0.2 .0 0.2 2.1
  Energy 4.0 -1.0 -3.2 1.1 -2.7 -1.6 -0.1 3.4
    Energy commodities 7.6 -2.8 -6.0 1.3 -6.2 -2.7 .0 3.1
      Gasoline (all types) 7.8 -3.0 -6.2 1.2 -6.4 -2.8 .0 3.0
      Fuel oil 3.5 -0.4 -0.8 -0.3 -2.8 -3.7 -2.0 3.6
    Energy services 0.3 1.0 -0.3 0.9 0.7 -0.5 -0.2 3.6
      Electricity .0 0.8 -0.1 0.6 0.3 -0.6 0.4 2.6
      Utility (piped) gas service 1.5 1.5 -0.8 2.2 1.9 -0.2 -2.3 7.5
  All items less food, energy 0.3 0.2 -0.1 0.1 0.1 0.1 0.1 1.7
    Commodities less food, energy 0.4 .0 -0.3 -0.2 -0.3 -0.1 -0.1 -0.6
      New vehicles 0.9 -0.2 -0.3 -0.2 -0.2 -0.3 -0.5 -0.6
      Used cars and trucks -0.4 -0.6 -0.9 -0.5 -0.2 -0.7 -0.5 -4.1
      Apparel 1.4 0.6 -0.7 -0.3 -0.8 -0.1 0.3 -0.4
      Medical care 0.3 -0.2 0.2 -0.8 0.4 0.7 1.0 3.7
    Services less energy 0.3 0.3 -0.1 0.1 0.2 0.2 0.2 2.4
      Shelter 0.2 0.3 0.1 0.3 0.2 0.2 0.1 3.2
      Transportation 0.6 0.7 0.4 -0.2 0.3 0.2 0.2 3.2
      Medical care 0.2 0.2 0.1 .0 -0.1 0.3 0.3 2.3

 

The BLS releases inflation data around the middle of every month based on consumer prices surveyed through to the previous month. The Consumer Price Index (CPI) for August and the latest annual period will become public on September 14, 2017.

CPI data is used in calculating inflation rates and in this site’s inflation calculator. The US Inflation Calculator shows cumulative inflation and the change in buying power of the U.S. dollar over time.

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