U.S. consumer prices rose more than expected in July and a measure of underlying or core inflation ran the quickest in nearly three decades, a government report published Aug. 12 shows.
In the longer term, however, while inflation accelerated over the past year it remains in check with gasoline prices significantly lower than they were last summer.
U.S. consumer prices rose 0.6% in July, matching the increase in June, 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 milk to medical care. Major news outlets polled economists who pegged the CPI for July at an increase ranging from 0.3% to 0.4%.
Prices at the pump picked up 5.6% last month after surging 12.3% previously. Despite two straight monthly increases, gasoline prices declined 20.3% from a year ago. The broader index for energy, which combines items like gasoline, electricity and fuel oil, climbed 2.5% in July after jumping 5.1% in June. Energy prices year-over-year fell 11.2%.
Overall food prices for the month declined 0.4% — their first drop since April 2019, after rising 0.6% in June. Food prices rose 4.1% year-on-year.
Excluding the more volatile food and energy components, so-called core consumer prices increased 0.6% in July — the biggest monthly advance since January 1991, after increasing 0.2% a month earlier.
Shelter or housing costs rose 0.2% in July following an increase of 0.1% in June, while their year-over-year level registered at 2.3%. 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 figure, U.S. inflation grew 1% in the 12 months through July after rising 0.6% previously. As recently as May, the rate logged in at 0.1% for the smallest 12-month increase since September 2015.
"July’s data confirmed that inflation followed the sharp rebound in consumer spending this summer stabilized the downward trend in prices," said a research note from Contingent Macro Advisors reported by the AP. "This report was not enough to turn the inflation trend higher, but it helped to alleviate near-term concerns about deflationary scenarios for the economy."
Core inflation rose 1.6% over the past year following two straight 1.2% increases. Those two were the smallest core rates since March 2011. 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 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 12, 2020. 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 2019 to July 2020 Consumer Prices – Gains & Losses in Percent
|Jan 2020||Feb 2020||Mar 2020||April 2020||May 2020||June 2020||July 2020||12 Month|
|Food at home||0.1||0.5||0.5||2.6||1.0||0.7||-1.1||4.6|
|Food away from home||0.4||0.2||0.2||0.1||0.4||0.5||0.5||3.4|
|Gasoline (all types)||-1.6||-3.4||-10.5||-20.6||-3.5||12.3||5.6||20.3|
|Utility (piped) gas service||1.0||-0.9||-1.4||0.2||0.8||.0||-1.0||-0.3|
|All items less food, energy||0.2||0.2||-0.1||-0.4||-0.1||0.2||0.6||1.6|
|Commodities less food, energy||.0||0.2||-0.3||-0.7||-0.2||0.2||0.7||-0.5|
|Used cars and trucks||-1.2||0.4||0.8||-0.4||-0.4||-1.2||2.3||-0.9|
|Services less energy||0.3||0.2||.0||-0.4||.0||0.3||0.6||2.3|
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 11, 2020.
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.