U.S. Consumer Price Gains Slow in July; Annual Inflation Remains Near 13-Year High

Americans paid less for goods and services in July versus June but inflation remained near a 13-year high on an annual basis, according to government data released Wednesday, August 11.

The pace of pricing increases rose virtually across the board from a year ago. Compared to the inflation report released a month earlier, annual levels eased just a tad for energy while prices ticked a percent higher for food.

In the headline monthly figure, U.S. consumer prices rose 0.5% in July, slowing from 0.9% in June which registered as the largest 1-month increase since June 2008, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a broad measure of what Americans pay for everyday items ranging from cereal to cars.

"The July CPI report showed reopening-sensitive categories moderating in importance, posting the weakest contribution to the month-over-month gain since March … Services categories will take the baton over time, evident in our view that rents — a third of the CPI — will look sturdier over the second half," Bloomberg News quoted economists Andrew Husby and Eliza Winger.

In some key consumer pricing categories:

  • Prices at the pump advanced 2.4% last month from 2.5%. Gasoline prices increased 41.8% year-over-year.

  • The broader index for energy, which combines items like gasoline, electricity and fuel oil, picked up 1.6% in July from 1.5% in the prior month. Energy prices shot up 23.8% in the past 12 months from 24.5% reported in June.

  • Prices for food increased 0.7% last month from 0.8%. Food prices jumped 3.4% year-over-year from 2.4% reported in June.

Excluding the more volatile food and energy components, core consumer prices picked up 0.3% in July following a 0.9% increase in June. The level of 0.9% was also reached in April which recorded as the highest since April 1982.

"Along with shelter and new vehicles, the indexes for recreation, for medical care, and for personal care increased in July. The index for used cars also increased in July, but the 0.2-percent advance was much smaller than in recent months," the Labor Department’s monthly report said.

Used car and truck prices spiked 10% in April, 7.3% in May and 10.5% in June. They are 41.7% higher than a year ago.

The cost of health care increased 0.3% last month after falling 0.1% for two months in a row. Health care prices also rose 0.3% year-over-year.

Shelter or housing costs for the month rose 0.4% from 0.5%. They advanced 2.8% from a year earlier. Components of shelter include pricing items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. The index accounts for about one-third of the entire CPI.

In the headline annual figure, inflation in the United States rose 5.4% in the 12 months ended July, matching June which logged as the largest increase since the annual period ending August 2008 when oil surged over $150 a barrel.

Core inflation increased 4.3% over the past 12 months, easing some from the previous 4.5% increase which was the largest 12-month gain since November 1991. The core, "all items less food and energy" index 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 July inflation report appears to give a little something to both the hawks and the doves within the Fed. Those focused on the level of inflation will likely see this as an indication that the case for tapering is increasingly clear, particularly given the state of the labor market and expectations for strong payroll gains in the near term. Conversely, doves in the Fed may focus on indications that the pace of price increases may be topping out with the potential to ease in the coming months," MarketWatch quoted Jim Baird, chief investment officer for Plante Moran Financial Advisors.

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 11, 2021. 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 2021 Consumer Prices – Gains & Losses in Percent

  January 2021 February 2021 March 2021 April 2021 May 2021 June 2021 July 2021 12 Month
All items 0.3 0.4 0.6 0.8 0.6 0.9 0.5 5.4
  Food 0.1 0.2 0.1 0.4 0.4 0.8 0.7 3.4
    Food at home -0.1 0.3 0.1 0.4 0.4 0.8 0.7 2.6
    Food away from home 0.3 0.1 0.1 0.3 0.6 0.7 0.8 4.6
  Energy 3.5 3.9 5.0 -0.1 .0 1.5 1.6 23.8
    Energy commodities 7.3 6.6 8.9 -1.4 -0.6 2.6 2.3 41.2
      Gasoline (all types) 7.4 6.4 9.1 -1.4 -0.7 2.5 2.4 41.8
      Fuel oil 5.4 9.9 3.2 -3.2 2.1 2.9 0.6 39.1
    Energy services -0.3 0.9 0.6 1.5 0.7 0.2 0.8 7.2
      Electricity -0.2 0.7 .0 1.2 0.3 -0.3 0.4 4.0
      Utility (piped) gas service -0.4 1.6 2.5 2.4 1.7 1.7 2.2 19.0
  All items less food, energy .0 0.1 0.3 0.9 0.7 0.9 0.3 4.3
    Commodities less food, energy 0.1 -0.2 0.1 2.0 1.8 2.2 0.5 8.5
      New vehicles -0.5 .0 .0 0.5 1.6 2.0 1.7 6.4
      Used cars and trucks -0.9 -0.9 0.5 10.0 7.3 10.5 0.2 41.7
      Apparel 2.2 -0.7 -0.3 0.3 1.2 0.7 .0 4.2
      Medical care -0.1 -0.7 0.1 0.6 .0 -0.4 0.2 -2.1
    Services less energy .0 0.2 0.4 0.5 0.4 0.4 0.3 2.9
      Shelter 0.1 0.2 0.3 0.4 0.3 0.5 0.4 2.8
      Transportation -0.3 -0.1 1.8 2.9 1.5 1.5 -1.1 6.4
      Medical care 0.5 0.5 0.1 .0 -0.1 .0 0.3 0.8

 

The BLS tends to release inflation data around the middle of a month based on consumer prices surveyed in the previous month. The Consumer Price Index (CPI) for August and the latest annual period become public on September 14, 2021.

CPI data is used in calculating inflation rates and in this site’s U.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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