The Consumer Price Index (CPI), the broadest measure of consumer prices, rose 3.2% annually in July. That is up from June when it was 3%, but well down from the peak of 8.8% in June 2022.
- On a monthly basis, inflation rose 0.2% from June to July, the same rate as from May to June.
Why it matters: We are still far from getting inflation down to the Federal Reserve’s 2% target.
Big picture: Core prices, which strip out volatile elements like food and energy, rose 4.7% on an annual basis and 0.2% from June to July. This is the metric the Fed looks at most closely, and it is still very high and hasn’t come down much since the Fed started raising interest rates in March 2022.
- The stickiness of the core data likely means the Fed will have to keep future rate hikes on the table.
Other key data points:
- Energy prices fell 13% because of a 20% drop in gas prices. Electricity rose by 3%.
- Food at home (groceries) prices rose 0.3% in July and are up 3.6% annually.
- Housing rose 7.7% on an annual basis.
- Used cars were down 5.6% from a year ago, but new cars were up 3.5%.
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