After rising to its highest level in 40 years in June, inflation dropped slightly in July. Thanks to a decrease in the gasoline index the Consumer Price Index (CPI) remained unchanged from the month prior, after hitting a 1.3% seasonally adjusted rate in June, according to data released Wednesday by the Bureau of Labor Statistics. Year over year, the CPI for all items rose 8.5% in July, down from the 9.1% yearly increase reported a month ago.
“I see a significant risk of high inflation into next year for necessities including food, housing, fuel, and vehicles,” Michelle Bowman, a member of the Board of Governors of the Federal Reserve System, said in a statement. “Rents have grown dramatically, and while home sales have slowed, the continued increasing price of single-family homes indicates to me that rents won’t decline anytime in the near future. Recently, gasoline prices have moderated but are still roughly 80% higher than pre-pandemic levels due to constrained domestic supply and the disruption of world markets.”
According to CPI data, the energy index fell 4.6% from the month prior due to price drops on natural gas and gasoline, with Americans spending 7.7% less to fill their tanks than they did in June. The energy index was still up 32.9% compared to a year ago, though the rate slowed from the 41.6% jump recorded in June.
The indexes for airline fares, used cars and trucks, communication, and apparel also all showed month over month in July.
However, these decreases were offset by increases in the indexes for shelter and food. From June, the food index rose 1.1% and the shelter index jumped 0.5%, with the rent index rising 0.7% and the owners’ equivalent rent index increasing 0.6%. Year over year, the food index rose 10.9%, the largest yearly increase since the period ending May 1979, while the shelter index rose 5.8%.
“The growth rate of inflation cooled down a bit more than anticipated,” Logan Mohtashami, HousingWire’s lead analyst, said. “Airline inflation which was getting hotter in recent months, gave some back today, along with anticipated declines in other categories. We still have a lot of work to get back toward the pre-COVID-19 trend, but the stock market and the bond market loved the news. Mortgage pricing should improve on today’s news.”
Excluding food and energy, which are more volatile items, the CPI was up 0.3% in July, after rising 0.7% in June. Over the last 12 months, inflation that excludes food and energy rose 5.9%, the same as in June.
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