Topline Inflation ticked up last month for the first time in more than a year but remains far below its historically high level reached last year as the Federal Reserve’s arduous campaign against rising prices continues.
Key Facts Consumer prices ticked up 0.2% from June to July, according to Labor Department data released Thursday morning.
That meets economists’ consensus estimates of a 0.2% jump.
Core inflation, which excludes more fickle food and energy prices, rose 0.2% last month, also in line with expectations of a 0.2% increase, and is up 4.7% on an annual basis.
Headline inflation came in at 3.2% in July, just below estimates of 3.3% and up from June’s 3%, which was the lowest reading since March 2021.
Shelter (rent and home payments) was the category which increased the most in price last month, accounting for more than 90% of the overall jump, according to the Labor Department.
Stocks climbed immediately following the report’s release, which Dow Jones Industrial Average futures up 165 points, or 0.5%.
Key Background After surging as high as 9.1% last summer, headline inflation crashed back down to more palatable levels in recent months, approaching the Fed’s long-term target of 2%. Much of the decreases came in energy, as gas prices fell significantly from their all-time high reached last year during the early months of Russia’s invasion of Ukraine. Since last spring, the Fed raised interest rates from near zero to over 5% in an effort to recalibrate the economy and return price increases to a more acceptable level. The central bank’s tightening campaign has shown signs of success at slowing inflation, but it has not come without pain as higher borrowing costs drove mortgage rates to two-decade highs and ate into corporate profits, contributing to a host of layoffs at large firms.
Crucial Quote “Although underlying inflation data suggests a decelerating trend, we maintain reservations about a seamless path towards 2% inflation by next year,” Vanguard economist Andrew Patterson wrote in emailed comments Wednesday.
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