US consumer prices climbed at a slower pace for a second straight month in July, pulled down by cheaper gasoline, but Americans felt the bite of inflation when paying for groceries and eating out. The month was a reversal of sorts from the previous one when prices at the pump spiked while food costs eased.
Consumer prices rose 0.1% in July following a 0.3% up-tick in June. The reading, pretty much in line with economists’ expectations, is the lowest since February. The inflation figure was revealed by the Labor Department’s Bureau of Labor Statistics (BLS) in its monthly report on the Consumer Price Index (CPI), released Tuesday, August 19, 2014. The CPI measures changes in prices that US consumers pay for goods and services throughout the country.
"Some of the inflation concerns that you were hearing back in June will probably ease off a little bit," Bloomberg News quoted Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York and the second-best forecaster of consumer prices over the last two years, according to Bloomberg data. "It takes some pressure off the Fed to speed up rate normalization. There had been a lot of rhetoric about the Fed being behind the curve on inflation, and this probably takes some wind out of that."
Rising the most was food prices, up 0.4% in July and 2.5% over the past 12 months. The price of food was 0.1% higher in June and soared 0.5% in May for the biggest gain since August 2011.
"The only major grocery store food group index not to rise in July was fruits and vegetables, which was unchanged," the CPI report stated.
Conversely, energy prices declined 0.3% in July, their first negative month since March and following a 1.6% jump in June. They are 2.6% higher than a year ago. Within the energy category last month, gas prices fell 0.3% after soaring 3.3% in June. They are up 0.8% from July 2013.
Pulling out energy and food, as economists like to do for analysis, so-called core consumer prices also rose 0.1% in July — the same increase as in June. In May, the core monthly inflation rate sprinted at 0.3% for the fastest pace since August 2011. Core advancing items included:
- Shelter, up 0.3% compared to 0.2% previously
- Rent, up 0.3% to match the prior two months
- Lodging away from home, up 2% after falling 1.9% previously
- Medical care commodities, up 0.3% compared to 0.7% previously
- Clothing, up 0.2% compared to 0.5% previously
- New vehicles, up 0.3% after falling 0.3% previously
- Dairy and related products, up 0.3% compared to the prior decrease 0.4%
- Medical care services prices rose 0.1%. They were flat previously.
- Meats, poultry, fish, and eggs rose 0.3 percent
Declining items included:
- Airfares, down 5.9% after rising 10.9% over the previous 5 months
- Household furnishing, down 0.1% after rising 0.2%
- Tobacco, down 0.3% after gaining 0.1%
- Used cars and trucks, down 0.3% compared to the prior decline of 0.4%
US inflation increased 2% over the last 12 months after advancing 2.1% in the previous two months — the quickest inflation rates since October 2012. Past US inflation rates reported by the BLS for 2014 include annual gains of 2% in April, 1.5% in March, 1.1% in February and 1.6% in January. (See annual inflation rates since 1914.)
Core US inflation rose 1.9% in the year-over-year period ended July, unchanged from the prior month. Core 12-month inflation rates reported earlier in 2014 include the April increase of 1.8%, the March advance of 1.7% and the matching 1.6% gains in February and in January. The core reading is the benchmark inflation figure monitored by the Federal Open Market Committee (FOMC) as it helps in deciding where to set the key interest rate. The latest annual increase of 1.9% is a touch under the Fed’s target inflation rate of 2%.
"This latest inflation reading confirms our view that the Fed will wait until mid-2015 for a rate liftoff," MarketWatch quoted Gregory Daco, lead U.S. economist at Oxford Economics.
Columns below offer recent monthly and annual percentage changes in prices of consumer goods and services that are surveyed and analyzed by the Bureau of Labor Statistic of the US Department of Labor.
January 2014 – July 2014 Consumer Prices – Gains & Losses in Percent
|Jan 2014||Feb 2014||Mar 2014||Apr 2014||May 2014||June 2014||July 2014||12 Month|
|Food at home||0.1||0.5||0.5||0.4||0.7||.0||0.4||2.7|
|Food away from home||0.1||0.3||0.3||0.3||0.2||0.2||0.3||2.4|
|Gasoline (all types)||-1.0||-1.7||-1.7||2.3||0.7||3.3||-0.3||0.8|
|Utility (piped) gas service||3.6||3.6||7.5||0.3||-1.7||-2.6||-0.4||6.9|
|All items less food, energy||0.1||0.1||0.2||0.2||0.3||0.1||0.1||1.9|
|Commodities less food, energy||-0.1||-0.1||.0||0.1||0.1||0.1||.0||-0.3|
|Used cars and trucks||-0.5||-0.1||0.4||0.5||-0.1||-0.4||-0.3||0.2|
|Services less energy||0.2||0.2||0.3||0.3||0.3||0.1||0.1||2.6|
US inflation data from the Bureau of Labor Statistic is published monthly, is normally released about two weeks into a new month, and covers through to the previous month. Data for August inflation via the Consumer Price Index (CPI) and BLS summary report is scheduled for release on September 17, 2014.
CPI data is used to calculate inflation rates and determines the results for site’s inflation-adjusting calculator. The US Inflation Calculator displays accumulated inflation and shows the change in buying power of the US dollar between two dates.