The Consumer Price Index increased 3.2% in July from the same time a year ago, showing signs of easing inflation in the U.S. economy.
Leading the way was the cost of housing, accounting for 90% of the increase with the index for motor vehicle insurance also contributing to the increase.
According to a report released Thursday by the Bureau of Labor Statistics, prices climbed 0.2% for July. The annual rate was just shy of the 3.3% forecast but still above June's figures. Excluding fluctuating food and energy prices, the core CPI also grew 0.2% for the month, leading to a 12-month rate of 4.7%. The yearly rate for core was slightly beneath a Dow Jones consensus estimate of 4.8%.
Food prices saw a monthly boost of 0.2%, while energy grew a mere 0.1%, despite crude prices spiking and fuel costs at the pump jumping. Conversely, used vehicle prices fell 1.3%, and medical care services declined 0.4%.
These relatively mild inflation levels contributed to an increase in worker pay. Real wages grew 0.3% on the month and 1.1% from last year, according to a separate release from the BLS.
The headline inflation rate marked an increase from June's 3%, though it fell short of expectations.
The latest data implies that while inflation has significantly dropped from its 40-year highs in mid-2022, it remains well above the Federal Reserve's preferred 2% level, making cuts in interest rates unlikely in the near future. The decelerating levels, however, alleviate some pressure on the Fed to continue its tightening policy.
Following 11 interest rate hikes since March 2022, central bank officials are expected to pause in September. Future actions remain a matter of debate, with regional Fed presidents John Williams of New York and Patrick Harker of Philadelphia hinting at an end to the hikes. Conversely, Gov. Michelle Bowman anticipates more increases, while fellow Gov. Christopher Waller sees the potential need for additional hikes.
The Fed’s next meeting will be in September.
