Former IMF chief economist Kenneth Rogoff discusses the state of the economy following the July CPI report.
Inflation fell again in July, even as rising costs for rent, groceries and auto insurance continued to keep prices uncomfortably high for millions of Americans.
The US Department of Labor announced on Wednesday that the Consumer Price Index (CPI), a general measure of the cost of everyday goods such as gasoline, groceries and rent, rose 0.2 percent in July compared to the previous month, in line with expectations.
Prices rose by 2.9% compared to the same period last year. This was the lowest inflation rate since March 2021.
Inflation rises by 2.9% in July, less than expected
“Evidence is mounting that consumers are struggling under the combined weight of high prices, elevated interest rates and a cooling labor market,” said Mark Hamrick, senior economic analyst at Bankrate. “Despite the ‘expected’ numbers, prices broadly continued to rise last month.”
Here’s a breakdown of where Americans are seeing the fastest price increases and decreases.
Rent
Housing costs were once again the main driver of inflation last month. Rents rose by 0.3 percent in the month and are up 5.1 percent compared to the same period last year.
Rising rents are a concern because higher housing costs place the most immediate and severe strain on household budgets.
A home for sale in the Capitol Hill neighborhood of Washington, DC, on July 30. (Tierney L. Cross/Bloomberg via Getty Images / Getty Images)
Another data point measuring how much homeowners would pay in equivalent rent if they had not purchased their home also rose 0.4 percent from the previous month.
Housing cost inflation was a “hairworm” in July’s consumer price index report, said Kathy Bosjancic, chief economist at Nationwide.
“These figures throw cold water on the idea that rent inflation is finally slowing down sustainably after the weak figures in June,” she added.
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Eat
For many Americans, food was one of the clearest reminders of inflation, as prices rose again in July.
Food costs rose 0.2 percent last month, up 2.2 percent from a year earlier. The out-of-home consumption index rose 0.2 percent, while food costs rose 0.1 percent.
Food costs 1.1 percent more than last year, and compared to January 2021 – before the inflation crisis began – prices have risen by more than 21 percent.
Consumers continued to pay more for a number of staple foods, including biscuits (1.5%), beef and veal (1.2%), ham (3.3%), chicken (0.1%), milk (1.9%), carbonated drinks (0.6%), coffee (1.7%), tomatoes (3.6%) and citrus fruit (1.6%).
Customers line up to purchase groceries at a supermarket in Foster City, California on Sunday. (Li Jianguo/Xinhua via Getty Images / Getty Images)
Last month, prices for rice, bread, ice cream, fish and seafood, among others, fell.
“While overall inflation has declined, some of the biggest vulnerabilities in consumer prices have worsened,” said Robert Frick, corporate economist at Navy Federal Credit Union.
energy
Energy prices remained unchanged in July after falling in the previous two months, easing some of the financial pressures facing many families.
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Gas prices also remained unchanged in July and are still 2.2 percent below the previous year’s level.
However, prices for propane, kerosene and firewood rose 1.9 percent in July, while heating oil costs increased 0.9 percent.
A customer fills up with gasoline at a Shell gas station in Miami on May 15. (Joe Raedle/Getty Images / Getty Images)
Cars
There was good news for Americans who wanted to buy a car in July.
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Prices for new cars and trucks fell again by 0.2 percent last month. Compared to the same period last year, they fell by 1 percent.
The Costs for used vehicles – which made a significant contribution to the rise in inflation in 2022 – also fell in July, by 2.3%. Compared to the previous year, prices fell by 10.9%.
On July 11, 2023, used cars will be offered for sale at a dealer in Chicago. (Scott Olson/Getty Images/Getty Images)
But there is another growing problem for car owners: insurance costs. Car insurance premiums rose by 1.2 percent in July; compared to the same period last year, prices rose by an astonishing 18.6 percent.
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Travel and transport
Airline ticket prices fell again in July, by 1.6 percent.
A Delta Air Lines Airbus A330 lands at Athens International Airport. (Nicolas Economou/NurPhoto via Getty Images / Getty Images)
According to the data, ticket prices have fallen by about 2.8 percent compared to the previous year.
