Month-Over-Month U.S. Inflation Flat in July 2022
For months, the top economic story has been inflation. In turn, the debuts of new inflation reports have become appointment viewing for economists and other observers. On that note, today’s release came with a bit of surprise and, overall, good news.
According to the latest Bureau of Labor Statistics Consumer Price Index report, overall index item prices were flat between June and July. By comparison, prices grew 1.3% in June and 1% in May. Notably, the index still showed an 8.5% rise in prices from July 2021 — which was down from the 9.1% 12-month increase observed in June 2022.
While July’s “all items” rate worked out to 0.0%, that figure is mostly thanks to plummeting gasoline and energy prices. In July, gasoline prices fell 7.6% after rising 10.4% in June (they’re still up 44% from July 2021). Similarly, the index found fuel oil prices dropping 11% for the month, building on a 1.2% dip the month prior. Other categories that inched lower in July included used vehicles (-0.4%) and transportation services (-0.5%).
As for item categories that continued to rise, “food at home” prices increased by 1.3% during the month, while prices for “food away from home” were up 0.7%. Year-over-year, these food prices have risen 13.6% and 7.6% respectively. Despite other types of energy falling, prices for electricity were also up, rising 1.6%. Elsewhere, outside of the Consumer Price Index itself, rent prices increased by 0.7% in July.
Today’s report has sparked hopes that inflation has reached its peak. Additionally, markets were up for the day following the news, with the S&P 500 gaining more than 2%. This is believed to be due in part to the hope that lessened inflation will lead the Federal Reserve to put off further rate hikes. However, the expectations of investors may be dashed, with Baird investment strategy analyst Ross Mayfield speculating to CNN Business, “The Fed is already committed to a rate hike path. The market is saying the Fed is closer to finished than they are to the beginning, [but] I’m not sure we’re quite there yet.”
There’s no doubt that today’s BLS report is good news for consumers. At the same time, it seems too early to declare that the worst is over. Plus, although falling gasoline prices are certainly offering a welcome reprieve for motorists, the impact of this decline on the overall price index complicates the overall results. Still, there’s reason to hope that inflation will continue to subside as the nation attempts a return to normalcy.