 | The Consumer Price Index (CPI) increased 0.3% in July |
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Implications: Consumer prices rebounded 0.3% in July after falling for the past three months. The increase came despite a 0.1% drop in medical care prices, the first decline for any month in 35 years. "Core" prices, which exclude food and energy, increased a modest 0.1% in July. These prices have increased at a 1.7% annual rate in the past three months, a significant acceleration from the 0.6% rate in the previous three-month period. We still think "cash" inflation better gauges the pain consumers are feeling. Cash inflation counts everything, including food and energy, but takes out something called "owners' equivalent rent" – the government's estimate of what homeowners would pay if they rented their own homes. Cash inflation increased 0.4% in July, the most for any month in almost a year. These prices are up 1.8% in the past twelve months, more than the overall CPI or "core" CPI. In other recent inflation news, import prices increased 0.2% in July, although all the increase was due to oil. Excluding petroleum, import prices were down 0.2%. In the past year, import prices are up 4.9%, 3.1% ex-petroleum. Export prices declined 0.2% in July, both including and excluding farm products, but are up around 4% in the past year. Also in other news, new claims for unemployment insurance increased 2,000 last week to 484,000. Continuing claims for regular state benefits declined 118,000 to 4.45 million.
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