A highly anticipated report released by the Labor Department on Thursday showed U.S. consumer prices increased in line with economist estimates in the month of July.
The Labor Department said its consumer price index rose by 0.2 percent in July, matching the uptick seen in June as well as expectations.
The modest increase in consumer prices was largely due to a continued advance by prices for shelter, which climbed by 0.4 percent for the second straight month.
Higher prices for motor vehicle insurance also contributed to the uptick, while prices for food and energy crept up by 0.2 percent and 0.1 percent, respectively.
The report also said the annual rate of growth by consumer prices accelerated to 3.2 percent in July from 3.0 percent in June. Economists had expected the pace of price growth to accelerate to 3.3 percent.
Excluding food and energy prices, core consumer prices also rose by 0.2 percent for the second straight month in July, in line with estimates.
The uptick in core prices reflected the higher prices for shelter and motor vehicle insurance as well as higher prices for education and recreation.
Decreases in prices for airline fares, used cars and trucks, medical care, and communication limited the upside.
Meanwhile, the annual rate of growth by core consumer prices slowed to 4.7 percent in July from 4.8 percent in June. The rate of growth was expected to be unchanged.
“The July CPI report was full of good news,” said FHN Financial Macro Strategist Will Compernolle. “There are some upside inflation risks in the months ahead, but supply chain normalization is finally passing through to core goods disinflation and many of the other pandemic inflation villains are showing signs of better balance.”
“The FOMC is set up to leave rates unchanged at the September meeting after this solid report,” he added. “If the next month of CPI data, jobs data, or PCE data show concerning surprises, that will more likely be reflected in the dot plot and SEP rather than the September decision itself.”
The Labor Department is scheduled to release a separate report on producer price inflation in the month of July on Friday.
The producer prices index is expected to rise by 0.2 percent in July after inching up by 0.1 percent in June, while the annual rate of growth is expected to accelerate to 0.7 percent from 0.1 percent.
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