Inflation in the United States unexpectedly cooled in July as a rebound in the cost of gasoline and other energy products decreased. The US Bureau of Labor Statistics’ latest consumer price index (CPI) for July reflected a year-over-year increase of 8.5%, 0.6% down from the record high 9.1% rate in June. This is still 2% higher than in July 2021. However, increases in the food and shelter index prove that inflation is still a concern for many.
The gasoline index declined in July, offsetting increases in the indexes for food, housing, apparel, and medical care. “The drop in gasoline prices has been very welcome, but that doesn’t solve the inflation problem,” said Bankrate Chief Financial Analyst Greg McBride.
The food index rose for the fourth consecutive month, with the index for food at home accounting for more than two-thirds of the increase. The shelter index also continued to rise, and the indexes for apparel, medical care, and used cars and trucks all increased in July as well.
“The easing of overall inflation coupled with strong labor market conditions could provide some optimism to the Federal Reserve that the rate hikes are working and that the elusive ‘soft landing’—that is, bring inflation down without sending the labor market tumbling—is a possibility,” Bright MLS Chief Economist Lisa Sturtevant said in a note. “However, high housing costs and the challenges they pose to prospective buyers and renters will continue to be a strain on the economy.” We may still see higher rates in the coming days, but the market has reacted positively to the reports for now.
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