U.S. CPI Total & Core Prices Increase Modestly in July

The Consumer Price Index increased 0.2% during July after slipping 0.1% in June and holding steady in May. A 0.2% rise had been expected in the Action Economics Forecast Survey. The y/y gain dipped to 2.9% from 3.0% in June and was below the peak 9.1% y/y increase in June of 2022. The three-month increase of 0.4% (AR) was below the 4.6% April high. Prices excluding food & energy rose 0.2% last month after edging 0.1% higher in June and 0.2% May. A 0.2% rise had been expected. Core consumer prices increased 1.6% (AR) during the last three months, the weakest gain since February 2021. The 3.2% y/y gain was the weakest since April 2021.

The CPI less food, energy and shelter, another measure of core pricing power, has been steady during each of the last three months, following nine consecutive moderate gains. The 1.7% y/y rise remained below the 7.6% y/y peak in February 2022 and compared to a low of 1.2% y/y in February 2021.

Services costs less energy rose 0.3% in July (4.9% y/y) following a 0.1% June gain and a 0.2% rise in May. Shelter costs rose 0.4% (5.1% y/y) following a 0.2% rise in June. The Bureau of Labor Statistics indicated that nearly 90% of the increase in last month’s all items CPI was due to shelter. Owners’ equivalent rent of primary residences increased 0.4% (5.3% y/y), following a 0.3% rise. Rents of primary residences moved up 0.5% (5.1% y/y) after a 0.3% gain while the cost of lodging away from home rose 0.2% (-2.3% y/y) after a 2.0% drop. Transportation service prices increased 0.4% (8.8% y/y) following a 0.5% decline. Education & communication prices rose 0.2% (2.2% y/y) following no change. Recreation services prices rose 0.4% (3.1% y/y) following a 0.1% decline and medical care service costs eased 0.3% (+2.8% y/y) after a 0.2% increase.

During July, the CPI for goods less food & energy weakened 0.3% (-1.9% y/y) after easing 0.1% in June. The index has fallen or held steady in all but one month during the last year. Transportation product prices declined 0.8% (-4.5% y/y) after falling in five of the prior six month. New vehicle prices eased 0.2% (-1.0% y/y), down for the sixth straight month while used car & truck prices dropped 2.3% (-10.9% y/y) after falling 1.5% in June. Prices for recreation products fell 0.3% (-1.1% y/y) after rising 0.4%. Apparel costs weakened 0.4% (+0.2% y/y) after edging up 0.1%. Working higher, home furnishings prices inched up 0.1% (-2.3% y/y) last month after falling 0.2% in June, while appliance costs rose 0.5% (-3.3% y/y) after two straight months of strong increase. Education & communication product costs moved higher by 0.4% (-6.2% y/y) following two months of decline. Medical care product prices rose 0.2% (2.8% y/y) for the second straight month.

Food prices rose 0.2% (2.2% y/y) in July, the same as in June. Egg prices jumped 5.5% (19.1% y/y) after a 3.5% gain. Meat, poultry & fish prices rose 0.3% (1.9% y/y) after easing 0.1% while cereal & bakery product prices declined 0.5%, unchanged y/y, after slipping 0.1% in June. Fruit & vegetable prices rose 0.8% (-0.2% y/y) after falling 0.5%, while dairy prices eased 0.2% both m/m and y/y after rising 0.6% in June. Nonalcoholic beverage prices rose 0.5% (1.9% y/y) after a 0.1% June improvement.

Energy prices held steady (+1.1% y/y) in July after falling 2.0% in both June and May. Gasoline prices were unchanged (-2.2% y/y) after falling roughly 3.8% in June & May. Amongst other energy products, fuel oil prices rose 0.9% (-0.3% y/y) after weakening 2.4% in June. Electricity prices edged 0.1% higher (4.9% y/y) after falling 0.7%, while natural gas prices weakened 0.7% (+1.5% y/y) after rising 2.4% in June.

The Consumer Price figures can be found in Haver's USECON database. The expectations figure is contained in the AS1REPNA database.