U.S. consumers prices increased in July, lifted by energy costs, to mark the largest gain since August 2009 and the first monthly increase since March 2010, the government reported Friday. Inflation also rose on a yearly basis, driven by the same higher energy prices.
The cost of energy rose for the first time this year and drove the Consumer Price Index 0.3 percent higher in July.
The energy index posted its first increase since January and accounted for over two thirds of the seasonally adjusted all items increase," noted the Labor Department’s CPI July report. "Both the gasoline and household energy indexes turned up in July after a series of declines. The food index, in contrast, declined in July, largely due to the fourth consecutive decline in the fruits and vegetables index."
The CPI is the most closely watched indicator for inflation. In contrast to July, prices during the months of June, May and April fell 0.1 percent, 0.1 percent and 0.2 percent. Consumer prices rose 0.1 percent in March.
Energy prices were up 2.6 percent after falling 2.9 percent in June. Gasoline was the biggest gainer, jumping 4.6 percent against a 4.5 decline in the prior month. Food prices fell 0.1 percent last month as compared to a flat reading in June.
Stripping away volatile energy and food costs, the so called core inflation rate grew 0.1 percent in July.
"Core inflation remains pretty low," Paul Ashworth, a senior economist at Capital Economics, said and was quoted on CNNMoney.com. "But the near-term risks of it plunging all the way to zero or below have certainly receded."
Other areas of prices increases in July included new and used vehicles, clothing, tobacco, and housing. Prices fell for airfares, medical care and household furniture.
Inflation over the past 12 months rose 1.2 percent after an annual inflation of 1.1 percent reported for June. Core inflation gained 0.9 percent on an annual basis, which was the same level as June, May and April — the smallest 12-month increase since January 1966.
The annual core rate remains a notch below the Federal Reserve’s target range of 1 percent – 2 percent.
July Consumer Price Details
|Food at home||0.4||0.1||0.5||0.2||.0||-0.1||-0.1||0.7|
|Food away from home||0.1||0.1||.0||0.1||0.1||0.1||.0||1.1|
|Gasoline (all types)||4.4||-1.4||-0.8||-2.4||-5.2||-4.5||4.6||7.4|
|Utility (piped) gas service||3.5||3.9||-0.7||-4.4||-1||0.6||1.7||3.1|
|All items less food, energy||-0.1||0.1||.0||.0||0.1||0.2||0.1||0.9|
|Comm. less food, energy||0.1||-0.1||-0.1||-0.3||0.1||0.2||0.2||1|
|Used cars and trucks||1.5||0.7||0.5||0.2||0.6||0.9||0.8||17|
|Services less energy||-0.2||0.1||0.1||0.2||0.1||0.1||0.1||0.8|
The Consumer Price Index for August 2010 is scheduled to be released on Friday, September 17, 2010, at 8:30 a.m. (EDT). The CPI data is used as the core engine for the U.S. Inflation Calculator.