Having risen to its highest level in 40 years last June, inflation declined marginally at the end of last month. Due to a decrease in the Consumer Price Index’s gasoline index, that market remained unchanged compared to one month earlier, having hit a seasonally adjusted rate of 1.3% in June.
The Bureau of Labor Statistics said the CPI for all items increased 8.5% in July, down from the 9.1% gain a month earlier.
Michelle Bowman, a member of the Board of Governors of the Federal Reserve System, told HousingWire that she sees a “significant risk” of higher inflation into next year with regard to necessities such as food, fuel, housing and vehicles.
“Rents have grown dramatically, and while home sales have slowed, the continued increasing price of single-family homes indicates to me that rents won’t decline anytime in the near future,” Bowman said. “Recently, gasoline prices have moderated but are still roughly 80% higher than pre-pandemic levels due to constrained domestic supply and the disruption of world markets.”
The CPI data shows that the energy index dropped 4.6% last month thanks to decreased prices of natural gas and gasoline. Americans are now spending 7.7% less to fill up their cars than they did a month earlier. However, the energy index is still up by a whopping 32.9 compared to the year before.
The indexes for airline fares, used cars and trucks, communication, and apparel also all fell compared to the month prior.
However, these decreases were offset by increases in the indexes for shelter and food. From June, the food index rose 1.1% and the shelter index jumped 0.5%, with the rent index rising 0.7% and the owners’ equivalent rent index increasing 0.6%. Year over year, the food index rose 10.9%, the largest yearly increase since the period ending May 1979, while the shelter index rose 5.8%.
Excluding food and energy, which are more volatile items, the CPI was up 0.3% in July, after rising 0.7% in June. Over the last 12 months, inflation that excludes food and energy rose 5.9%, the same as in June.