The annual inflation rate accelerated slightly as consumer prices edged up from a year ago, according to a U.S. government report released on Thursday, August 10th. While Americans continue to grapple with essential expenses like shelter and food, there are indicators suggesting that inflation pressures are beginning to exhibit further signs of cooling.
In the headline monthly figure, U.S. consumer prices in July rose by 0.2%, the same increase as in June, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a closely watched inflation gauge that measures what Americans consumers pay for everyday items, ranging from coffee to cars.
In the course of the month, overall food prices experienced a 0.2% increase, following a 0.1% rise in June. Within the food category, prices for groceries ascended by 0.3% from their unchanged state in June. Additionally, the expense associated with dining out continued to rise, albeit to a lesser degree, with a 0.2% increase compared to the previous month’s 0.4% upturn.
Meanwhile, food inflation over the past year has remained elevated at 4.9%, which is a decrease from the previous rate of 5.7%. During this same period, grocery prices increased by 3.6%, while the cost of food consumed outside of the home rose by 7.1%. These figures compare to their respective previous rising rates of 4.7% for groceries and 7.7% for dining out.
In other sectors, prices at the pump slowed down to a growth rate of 0.2% in July, contrasting with the 1% increase observed in June. When looking at a year-on-year comparison, gas prices declined by 19.9%, showing another improvement from the previous decrease of 26.5%. To offer some context, the inflation rate for gasoline over the 12 months ending in June 2022 surged by 59.9%, marking the highest level since March 1980.
The broader energy index, encompassing items such as gasoline, electricity, and fuel oil, saw a 0.1% increase in the month of July, following a rise of 0.6% in June. Energy prices year-over-year decreased by 12.5%, which is lower than the previously recorded fall of 16.7%.
Excluding the more volatile food and energy components, the rate of core consumer prices in July rose by 0.2%, also the same increase as in June. These matching increases are the smallest since August 2021.
Shelter or housing prices exhibited a 0.4% growth for the month, mirroring the increase seen in June, while still recording a substantial year-over-year rise of 7.7%. For recent comparisons, they achieved gains of 7.8% in June, 8% in May, 8.1% in April, and 8.2% in March, marking their most significant 12-month increase since June 1982.
"The index for shelter was by far the largest contributor to the monthly all items increase, accounting for over 90 percent of the increase, with the index for motor vehicle insurance also contributing," the Labor Department’s monthly report said.
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 remained unchanged after experiencing a 0.3% increase for the fourth consecutive month. They have risen by 3.2% compared to a year ago.
- New vehicle prices decreased by 0.1% in July, following a period of being flat in June, declining by 0.1% in May, and falling by 0.2% in April. This decline in April marked the end of a streak of 23 consecutive increases. Nonetheless, they still exhibited a year-over-year increase of 3.5%.
- Prices for used cars and trucks fell by 1.3% after slipping 0.5% in June and registering increases of 4.4% in both April and May. Before then, they marked nine consecutive monthly declines. In comparison to prices from a year ago, they have decreased by 5.6%. This stands in stark contrast to the situation in February of the previous year when they experienced a substantial year-on-year increase of 41.2%.
- When compared to the previous year, airline fares tumbled 18.6%. As for the month, they dropped 8.1%, which matches the decrease observed in June, thus extending their streak of monthly declines to four in a row.
In terms of the headline annual rate, inflation increased by 3.2% from a year earlier, which is quicker than the 3% rate reported previously.
For some perspective, the highest inflation rate in the past year occurred in the 12-month period ending in July, which was at 9.1% — the fastest rate of inflation since November 1981. Additionally, until March of this year, inflation rates had been at or above 6% for seventeen consecutive months.
Meanwhile, core inflation increased by 4.7% over the past year, down a smidgen from 4.8% previously. 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. The current pace is the slowest since October 2021. As recently as September, the 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.
"Significant progress on the inflation front has been made, a persistent trend of disinflation is evident," Reuters quoted Sung Won Sohn, a finance and economics professor at Loyola Marymount University in Los Angeles. "It is time for the central bank to stop its campaign to beat inflation, it should wait and see for a while."
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 Aug. 10, 2023. 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.
December 2022 to July 2023 Consumer Prices – Gains & Losses in Percent
(Seasonally Adjusted from Prior Month and Unadjusted 12-Month)
|Jan 2023||Feb 2023||Mar 2023||Apr 2023||May 2023||June 2023||July 2023||12 Month|
|Food at home||0.4||0.3||-0.3||-0.2||0.1||0.0||0.3||3.6|
|Food away from home||0.6||0.6||0.6||0.4||0.5||0.4||0.2||7.1|
|Gasoline (all types)||2.4||1||-4.6||3||-5.6||1.0||0.2||-19.9|
|Utility (piped) gas service||6.7||-8||-7.1||-4.9||-2.6||-1.7||2.0||-13.7|
|All items less food, energy||0.4||0.5||0.4||0.4||0.4||0.2||0.2||4.7|
|Commodities less food, energy||0.1||0.0||0.2||0.6||0.6||-0.1||-0.3||0.8|
|Used cars and trucks||-1.9||-2.8||-0.9||4.4||4.4||-0.5||-1.3||-5.6|
|Services less energy||0.5||0.6||0.4||0.4||0.4||0.3||0.4||6.1|
The BLS releases inflation data around the middle of the month for 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 Sept. 13, 2023.
The CPI data is also used to calculate inflation rates and to power this site’s U.S. Inflation Calculator. The U.S. Inflation Calculator displays the cumulative inflation and the change in the buying power of the U.S. dollar over time.