A bump up in energy costs led to a rebound in CPI inflation, ending a
three month string of declines. Meanwhile, the core rate remained soft.
In June overall CPI inflation rebounded 0.3 percent, following a 0.1
percent decline in June. July's rise equaled analysts' forecast for a
0.3 percent increase. Excluding food and energy, the CPI eased to a 0.1
percent gain after a 0.2 percent boost in June. The consensus
projection was for a 0.1 percent increase.
Within the core, a lot was going on. Probably the biggest item of note
was the continuation of soft shelter costs which rose only 0.1 percent
for the fourth month in a row. This reflects the weak housing market
which has resulted in more unsold homes going to the rental market.
Medical care cost fell back 0.1 percent after jumping 0.3 percent in
June.
But some components showed some strength. Apparel jumped
0.6 percent. Tobacco spiked 1.6 percent. And new & used motor
vehicles gained 0.3 percent.
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Yearly changes tend to smooth
out more severe monthly fluctuations and give a better idea of the
underlying rate of inflation. Even with the smoother trend, note that
the core CPI does not fluctuate as much as the total CPI.
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Data Source: Haver Analytics