Inflation ticked higher in July, moving further from the Federal Reserve’s 2% target as central bank policymakers weigh the economy’s outlook against President Biden’s calls for interest rate cuts.
The Consumer Price Index (CPI) rose 0.2% from June and 2.7% compared with last year, the Bureau of Labor Statistics reported Tuesday. The monthly increase matched economists’ expectations, while the annual rate came in slightly cooler than the 2.8% forecast.
Core Inflation Still Hot
Core prices — excluding food and energy — climbed 0.3% from last month and 3.1% year-over-year. That annual figure was hotter than the 3% estimate, signaling that underlying inflationary pressures remain strong.
High inflation in recent years has strained U.S. households, forcing families to pay more for necessities like food, rent, and transportation. Lower-income Americans have been hit hardest, with little room in their budgets to absorb higher costs.
Food and Energy Trends
Food prices were flat compared with June. Grocery costs slipped 0.1%, while dining out rose 0.3%. Over the past year, grocery prices are up 2.2% and restaurant prices 3.9%.
Egg prices fell 3.4% in July but remain 16.4% higher than a year ago. Meats, poultry, and fish prices rose 0.7% for the month and 4.6% annually. Dairy prices also rose 0.7% in July.
Energy prices dropped 1.1% last month and are down 1.6% from last year. Gasoline prices fell 2.2% in July and have dropped 9.5% year-over-year.
Housing and Transportation Costs
Housing prices increased 0.2% for the month and 3.7% over the past year, with shelter costs remaining the largest driver of the overall index.
Transportation costs jumped 0.8% in July and 3.5% annually. Airfares spiked 4% last month, while auto maintenance and repair rose 1% and is up 6.5% from last year.
