U.S. Inflation Ticks Up for First Time in a Year

After 12 straight months of declines, the cost of goods and services for U.S. consumers rose in July. The Consumer Price Index (CPI) for All Urban Consumers, a measure of price changes commonly referred to as the inflation rate, registered at 3.2% in the year-ending July 2023, according to the Bureau of Labor Statistics. That measure was up from the 3% annual increase in June – which was the lowest level since March 2021 – and in line with economists’ expectations of 3.3%. Still, inflation has cooled considerably since reaching a 40-year high of 9.1% in June 2022. However, inflation remains well above the Fed’s target rate of 2% annually. Excluding volatile food and energy prices, the core CPI increased 4.7% during the year-ending July, down slightly from the 4.8% annual increase in June and the lowest level since October 2021. Looking at other indexes, shelter, which has a well-documented lag effect and accounts for about one-third of the total CPI index, saw a 7.7% year-over-year price surge in July, still registering as one of the biggest annual gains in the past 40 years. Meanwhile, the cost of food was up 4.9% over the past year. And new vehicles posted an annual price increase of 3.5%. The cost of energy dropped 12.5% year-over-year in July, with the cost of gasoline (-19.9%) having a deep impact on that decline. The price of used cars and trucks (-5.6%) was also down on an annual basis. Airline fares, which saw huge price jumps in 2022 through early 2023, fell 18.6% in the year-ending July.