July 2010 Consumer Price Index

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.

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.

Data Source: Haver Analytics