As we saw in July, year-over-year CPI soared 2.7%. The Bureau of Labor Statistics (BLS) reported a seasonally adjusted increase of just 0.2% for that month on Tuesday. This increase may be significant, but it was not enough. Even setting aside predictions about the long-term effect of tariffs on inflation, economic fears have not gone away.
In July, transportation services and medical care services both recorded their largest monthly price increases on record with a 0.8% spike each. The CPI, not including food and energy—known as the core CPI—was up 0.3% month-to-month. By the same measure from a year ago, it is up 3.1%. Analysts had been expecting a 0.3% month-over-month increase on the core CPI. They were counting on a 3% annual growth in the revenues as well.
Curiously, President Donald Trump recently nominated E.J. Antoni to take over as chief of the BLS. This decision followed the firing of the last commissioner in the wake of a lackluster July nonfarm payrolls report. The appointment takes place as the administration is still feeling their way through economic headwinds.
Shelter costs were the biggest driver of the overall CPI increase, climbing by 0.2%. In other news, used cars and trucks increased by 0.5%, but the new vehicle prices stayed flat. Food prices were unchanged and energy prices fell 1.1%. Household furnishings and miscellaneous household items all measured positive inflationary increases of 0.7% each, and apparel advanced by 0.1%. Ex-core commodity prices were up only 0.2%.
“The tariffs are in the numbers, but they’re certainly not jumping out hair on fire at this point,” said Jared Bernstein, providing insight into the current economic landscape.
We know economic data is dynamic and ever-evolving. Now more than ever, policymakers and analysts are watching the effects of these price changes with great interest. Modest consumer price increases have sent warning signals about inflation. We more broadly note that high inflation will cut into consumer spending and limit growth.