US inflation tamed a bit more in July with consumer prices once again unchanged as Americans paid more for food and other items but less on energy. Overall, most US government tracked categories logged very small pricing movements.
Consumer prices were flat in July for a second straight month and the third time in four months, the US Labor Department reported Wednesday in Washington. Most economists were expecting at least a slight pick-up due to rising food prices.
"Lower prices are good because they leave more money in consumers’ pockets," CNNMoney quoted James Marple, senior economist with TD Economics. "On the other hand, it does represent a relatively weak economy."
Food costs were up 0.1 percent last month, down from the 0.2% increase in June, and energy prices were 0.3 percent lower in July versus the prior 1.4 percent decrease.
"Inflation is on a clear downward trajectory. With an unemployment rate at 8.3 percent, weak economic growth, both domestically and globally, and a rising U.S. dollar, inflation is likely to drift lower over the coming months," the Washington Post further quoted Marple.
Over the past year, food prices gained 2.3 percent while energy prices fell 5.0 percent. That could change in next month’s inflation report with gasoline prices up sharply in August.
Stripping out the more volatile food and energy categories, core US inflation rose 0.1 percent in July after four straight monthly increases of 0.2 percent. The US Labor Department in its monthly Consumer Price Index (CPI) report noted the following about core prices it tracks:
"The index for shelter rose 0.1 percent, the same increase as in June. The rent index increased 0.3 percent and the index for owners’ equivalent rent rose 0.2 percent, but the index for lodging away from home fell 2.3 percent. The medical care index, which rose 0.6 percent in June, increased 0.4 percent in July, with the indexes for physicians’ services and hospital services also rising 0.4 percent. The tobacco index rose sharply in July, increasing 1.1 percent, and the index for household furnishings and operations repeated its June increase of 0.2 percent. The apparel index rose 0.2 percent, its fifth consecutive increase, and the personal care index also increased 0.2 percent. In contrast, the index for airline fares declined sharply for the second consecutive month, falling 2.7 percent. The index for used cars and trucks fell 0.5 percent and the indexes for new vehicles and for recreation both fell 0.1 percent."
US inflation climbed 1.4 percent over the past 12 months compared to matching 1.7% advances in each of the two previous months. It was the smallest 12-month change since November 2010.
Core US inflation advanced 2.1 percent over the past year, down from the 2.2 percent increase in June. It was the smallest gain since October 2011.
The core US inflation rate is closely watched by the Federal Reserve as it helps determine where the central bank sets its key interest rate. The level remains above the Fed’s 2.0 percent target area, but it is not a major concern given the current US unemployment rate of 8.3 percent.
"Inflation has declined since earlier this year, mainly reflecting lower prices of crude oil and gasoline, and longer-term inflation expectations have remained stable," state FOMC meeting notes released August 1, 2012.
"The Committee anticipates that inflation over the medium term will run at or below the rate that it judges most consistent with its dual mandate."
The following table offers US Labor Department inflation data ranging from January to July and over the past 12 months.
January – July 2012 Consumer Prices – Gains (percent)
|June 2012||July 2012||12
|Food at home||.0||.0||0.1||0.2||-0.1||0.1||.0||1.9|
|Food away from home||0.4||0.1||0.2||0.3||0.2||0.2||0.2||2.9|
|Gasoline (all types)||0.9||6.0||1.7||-2.6||-6.8||-2.0||0.3||-5.5|
|Utility (piped) gas service||-2.9||-3.4||0.9||-1.8||-4.1||1.7||-0.2||-12.7|
|All items less food, energy||0.2||0.1||0.2||0.2||0.2||0.2||0.1||2.1|
|Comm. less food, energy||0.2||0.1||0.2||0.2||0.2||0.2||.0||1.1|
|Used cars and trucks||-1.0||-0.2||1.3||1.5||1.0||.0||-0.5||1.1|
|Services less energy||0.2||0.1||0.2||0.3||0.2||0.2||0.1||2.5|
Consumer Price Index figures for August get released by the US Labor Department on September 14, 2012 at 8:30 AM ET. CPI information is used as the core data for this site’s US Inflation Calculator.
People I know unanimously agree that their cost of living is increasing and has for the past two years. There is unanimous agreement that food, utilities, property taxes, healthcare (dentistry, lab work, office visits, scripts), homeowner insurance and car insurance are all substantially higher. As a result, people don’t believe the government stats — regardless of how the numbers are compiled, the inflation reports do not match people’s first hand experience.