Consumer Prices Rise Broadly in July


Headline inflation accelerated over the month of July, while core inflation remained unchanged.

The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 0.3% on a seasonally adjusted basis in July, faster than the 0.1% increase in June and May. Excluding the volatile food and energy components, the “core” CPI increased by 0.3% in July, the same increase as in June. The July increase in the “core” CPI reflected increases in the indexes for shelter (0.3%), medical care (0.5%), apparel (0.4%), and used cars and trucks (0.9%).

The price index for a broad set of energy sources rose by 1.3% in July, after a 2.3% decrease in June. In July, the gasoline, fuel oil and electricity indexes increased, as the utility gas service index declined by 1.8%. The food index was unchanged for the second consecutive month.

The figure below shows monthly changes in the CPI, the “core” CPI, energy prices and the food index in June and July.

Over the past twelve months, on a not seasonally adjusted basis, the CPI rose by 1.8% in July, faster than a 1.6% increase in June. Meanwhile, the “core” CPI increased by 2.2% over the past twelve months, after rising 2.1% in June. It was the largest gain since January 2019 on a year-over-year basis.

NAHB constructs a “real” rent index to indicate whether inflation in rents is faster or slower than overall inflation. It provides insight into the supply and demand conditions for rental housing. When inflation in rents is rising faster (slower) than overall inflation, the real rent index rises (declines). The real rent index is calculated by dividing the price index for rent by the core CPI (to exclude the volatile food and energy components).

The Real Rent Index was unchanged in July, following a 0.1% increase in June. Over the first seven months of 2019, the monthly growth rate of the Real Rent Index was 0.2%, on average, higher than the average of 0.1% in 2018.


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