Driven by rising shelter costs, U.S. consumer prices edged higher in July after a rare overall decline in June — the first in more than four years. Despite this uptick, annual inflation slowed to its lowest point since early 2021.
The headline inflation figure shows that U.S. consumer prices rose by 0.2% in July, following a 0.1% decline in June — the first monthly decrease since May 2020, according to the Labor Department’s August 14 report on the Consumer Price Index (CPI).
The CPI, a closely watched inflation gauge, measures what American consumers pay for everyday items ranging from eggs to energy. The increase was in line with economists’ expectations.
Overall, food prices increased by 0.2% for the second consecutive month. Within the food category, grocery prices climbed by 0.1%, also for the second month in a row, while dining-out expenses grew by 0.2% following a 0.4% increase in the previous month.
Meanwhile, over the past year, food inflation increased by 2.2%, the same as previously. Grocery prices rose by 1.1% over the year, while dining-out costs increased by 4.1%, both matching the last reported annual gains.
In other sectors, pump prices remained unchanged in July, following a 3.8% decline in June. Year-on-year, gas prices saw a 2.2% decline, compared to the previous decline of 2.5%.
The broader energy index, which includes items like gasoline, electricity, and fuel oil, remained unchanged for the month after falling by 2% for two consecutive months. Energy prices year-over-year rose by 1.1%, compared to the previous increase of 1%.
Excluding volatile food and energy components, the rate of core consumer prices increased by 0.2% in July, meeting expectations, compared to the 0.1% rise previously.
Shelter or housing prices increased by 0.4% for the month, representing their 51st consecutive monthly rise, following a 0.2% increase. Year-over-year, they increased by 5.1%.
"The index for shelter rose 0.4 percent in July, accounting for nearly 90 percent of the monthly increase in the all items index," the Labor Department’s monthly report said.
Recent 12-month comparisons show gains of 5.2% in June, 5.4% in May, 5.5% in April, 5.7% in both March and February, 6% in January, 6.2% in December, 6.5% in November, 6.7% in October, 7.2% in September, 7.3% in August, 7.7% in July, 7.8% in June, 8% in May, 8.1% in April, and 8.2% in March, the latter being the most significant annual increase since June 1982.
Components of shelter include prices of items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. This index accounts for about one-third of the entire CPI.
In other closely watched pricing areas:
- Clothing prices declined by 0.4% for the month after edging 0.1% higher previously. They advanced 0.2% from a year ago.
- New vehicle prices declined by 0.2% for the second consecutive month. They showed a year-over-year decline of 1%.
- Prices for used cars and trucks fell by 2.3% during the month, following a 1.5% decline previously. Compared to prices from a year ago, they plunged by 10.9%.
- When compared to the previous year, airline fares fell by 2.8%. As for the month, they decreased by 1.6% following a 5% decline.
In terms of the headline annual rate, inflation rose by 2.9% for the 12 months ending in July, slightly below expectations of 3%. The figure was the smallest since March 2021, and compared to 3% in the previous period.
For a broader perspective and a look further back, the inflation rate peaked at 9.1% during the 12-month period ending in June 2022. This was the fastest rate of inflation since November 1981. Additionally, until March 2023, inflation rates had remained at or above 6% for 17 consecutive months.
Meanwhile, core inflation increased by 3.2% in the year through July, as expected, compared to the previous increase of 3.3%. This was the smallest increase since April 2021. This core, "all items less food and energy" index is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) to guide the central bank in setting its key interest rate.
"Today’s CPI print removes any lingering inflation obstacles that may have been preventing the Fed from starting the rate cutting cycle in September," CNBC quoted Seema Shah, chief global strategist at Principal Asset Management. "Yet, the number also suggests limited urgency for a 50 basis point cut."
As recently as September 2022, the annual core inflation rate at 6.6% was the highest since August 1982. Many economists consider the core reading as a better predictor for future inflation.
The following table of key inflation figures is for the last seven months through July, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi) on August 14, 2024. 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 2024 to July 2024 Consumer Prices – Gains & Losses in Percent
(Seasonally Adjusted from Prior Month and Unadjusted 12-Month)
Jan 2024 | Feb 2024 | Mar 2024 | Apr 2024 | May 2024 | June 2024 | July 2024 | 12 Month | |
All items | 0.3 | 0.4 | 0.4 | 0.3 | 0.0 | -0.1 | 0.2 | 2.9 |
Food | 0.4 | 0.0 | 0.1 | 0.0 | 0.1 | 0.2 | 0.2 | 2.2 |
Food at home | 0.4 | 0.0 | 0.0 | -0.2 | 0.0 | 0.1 | 0.1 | 1.1 |
Food away from home | 0.5 | 0.1 | 0.3 | 0.3 | 0.4 | 0.4 | 0.2 | 4.1 |
Energy | -0.9 | 2.3 | 1.1 | 1.1 | -2.0 | -2.0 | 0.0 | 1.1 |
Energy commodities | -3.2 | 3.6 | 1.5 | 2.7 | -3.5 | -3.7 | 0.1 | -2.0 |
Gasoline (all types) | -3.3 | 3.8 | 1.7 | 2.8 | -3.6 | -3.8 | 0.0 | -2.2 |
Fuel oil | -4.5 | 1.1 | -1.3 | 0.9 | -0.4 | -2.4 | 0.9 | -0.3 |
Energy services | 1.4 | 0.8 | 0.7 | -0.7 | -0.2 | -0.1 | -0.1 | 4.2 |
Electricity | 1.2 | 0.3 | 0.9 | -0.1 | 0.0 | -0.7 | 0.1 | 4.9 |
Utility (piped) gas service | 2.0 | 2.3 | 0.0 | -2.9 | -0.8 | 2.4 | -0.7 | 1.5 |
All items less food, energy | 0.4 | 0.4 | 0.4 | 0.3 | 0.2 | 0.1 | 0.2 | 3.2 |
Commodities less food, energy | -0.3 | 0.1 | -0.2 | -0.1 | 0.0 | -0.1 | -0.3 | -1.9 |
New vehicles | 0.0 | -0.1 | -0.2 | -0.4 | -0.5 | -0.2 | -0.2 | -1.0 |
Used cars and trucks | -3.4 | 0.5 | -1.1 | -1.4 | 0.6 | -1.5 | -2.3 | -10.9 |
Apparel | -0.7 | 0.6 | 0.7 | 1.2 | -0.3 | 0.1 | -0.4 | 0.2 |
Medical care | -0.6 | 0.1 | 0.2 | 0.4 | 1.3 | 0.2 | 0.2 | 2.8 |
Services less energy | 0.7 | 0.5 | 0.5 | 0.4 | 0.2 | 0.1 | 0.3 | 4.9 |
Shelter | 0.6 | 0.4 | 0.4 | 0.4 | 0.4 | 0.2 | 0.4 | 5.1 |
Transportation | 1.0 | 1.4 | 1.5 | 0.9 | -0.5 | -0.5 | 0.4 | 8.8 |
Medical care | 0.7 | -0.1 | 0.6 | 0.4 | 0.3 | 0.2 | -0.3 | 3.3 |
The BLS releases inflation data around the middle of the month, covering consumer prices surveyed up to the previous month. The Consumer Price Index (CPI) for August and the latest annual period will be made public on September 11, 2024.
The CPI data is also used to calculate inflation rates and power this site’s U.S. Inflation Calculator, which displays the cumulative inflation and the change in the buying power of the U.S. dollar over time.