JULY CPI DATA: Inflation Still Running Hot

By at 11 August, 2021, 1:07 pm

by Raymond J. Keating –

Inflation continued to run hot in July. According to the latest report from the U.S. Bureau of Labor Statistics, Consumer Price Index (CPI) inflation registered 0.5 percent in July.

Over the past year, inflation came in at 5.4 percent.

And if that’s not high enough, over the past six months, inflation has been running at an annualized rate of better than 7.5 percent.

The hope, however, is that inflation in July started the process of calming down, given that June came in at 0.9 percent, and the previous three months were all higher as well – May at 0.6 percent, April at 0.8 percent and March at 0.6 percent.

Let’s hope that is the case, and that supply chain and labor challenges continue to work themselves out, and by doing so, price increases settle down.

Source: Federal Reserve Bank of St. Louis, FRED

But periods of high inflation also tend to have significant volatility from month to month, and again, the July rate, though somewhat slower than in previous months, was very high.

Meanwhile, some people are trying to take heart by the fact that CPI less all food items and energy increased by 0.3 percent in July, which was down from a 0.9 percent jump in June.

However, excluding food and energy means that we not only are no longer talking about inflation, but we also would be ignoring items that make up a major part of individual and family budgets.

Time will tell if July started a positive trend toward lowering inflation, or if it was simply part of a continuing bout with a troublingly high levels of inflation.

As for the Fed, it shouldn’t assume anything, and therefore, should be focused exclusively on bringing about price stability.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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